1. No category

No. 14-826(L)
No. 14-832(CON)
In the United States Court of Appeals
for the Second Circuit
____________________________
CHEVRON CORPORATION,
Plaintiff-Appellee,
V.
STEVEN DONZIGER, THE LAW OFFICES OF STEVEN R. DONZIGER,
DONZIGER & ASSOCIATES, PLLC, HUGO GERARDO CAMACHO NARANJO,
JAVIER PIAGUAJE PAYAGUAJE,
Defendants-Appellants,
(caption continues on inside cover)
____________________________
On Appeal from the United States District Court for the
Southern District of New York (The Honorable Lewis A. Kaplan)
_________________________________________________________
CORRECTED BRIEF FOR DEFENDANTS-APPELLANTS STEVEN
DONZIGER, THE LAW OFFICES OF STEVEN DONZIGER, AND
DONZIGER & ASSOCIATES PLLC
_________________________________________________________
JUSTIN MARCEAU
JOHN CAMPBELL
University of Denver
Sturm College of Law
2255 E. Evans Ave.
Denver, CO 80208
(303) 871-6000
DEEPAK GUPTA
GREGORY A. BECK
JONATHAN E. TAYLOR
Gupta Beck PLLC
1735 20th Street, NW
Washington, DC 20009
(202) 888-1741
Counsel for Defendants-Appellants Steven Donziger,
The Law Offices of Steven Donziger, and Donziger & Associates PLLC
July 16, 2014
STRATUS CONSULTING, INC., DOUGLAS BELTMAN, ANN MAEST,
Defendants-Counter-Claimants,
PABLO FAJARDO MENDOZA, LUIS YANZA, FRENTE DE DEFENSA DE LA AMAZONIA, AKA
AMAZON DEFENSE FRONT, SELVA VIVA SELVIVA CIA, LTDA, MARIA AGUINDA SALAZAR,
CARLOS GREFA HUATATOCA, CATALINA ANTONIA AGUINDA SALAZAR, LIDIA ALEXANDRA
AGUIN AGUINDA, PATRICIO ALBERTO CHIMBO YUMBO, CLIDE RAMIRO AGUINDA AGUINDA,
LUIS ARMANDO CHIMBO YUMBO, BEATRIZ MERCEDES GREFA TANGUILA, LUCIO ENRIQUE
GREFA TANGUILA, PATRICIO WILSON AGUINDA AGUINDA, CELIA IRENE VIVEROS CUSANGUA,
FRANCISCO MATIAS ALVARADO YUMBO, FRANCISCO ALVARADO YUMBO, OLGA GLORIA
GREFA CERDA, LORENZO JOSE ALVARADO YUMBO, NARCISA AIDA TANGUILA NARVAEZ,
BERTHA ANTONIA YUMBO TANGUILA, GLORIA LUCRECIA TANGUI GREFA, FRANCISO VICTOR
TRANGUIL GREFA, ROSA TERESA CHIMBO TANGUILA, JOSE GABRIEL REVELO LLORE, MARIA
CLELIA REASCOS REVELO, MARIA MAGDALENA RODRI BARCENES, JOSE MIGUEL IPIALES
CHICAIZA, HELEODORO PATARON GUARACA, LUISA DELIA TANGUILA NARVAEZ, LOURDES
BEATRIZ CHIMBO TANGUIL, MARIA HORTENCIA VIVER CUSANGUA, SEGUNDO ANGEL AMANTA
MILAN, OCTAVIO ISMAEL CORDOVA HUANCA, ELIA ROBERTO PIYAHUA PAYAHUAJE, DANIEL
CARLOS LUSITAND YAIGUAJE, BENANCIO FREDY CHIMBO GREFA, GUILLERMO VICENTE
PAYAGUA LUSITANTE, DELFIN LEONIDAS PAYAGU PAYAGUAJE, ALFREDO DONALDO PAYAGUA
PAYAGUAJE, MIGUEL MARIO PAYAGUAJE PAYAGUAJE, TEODORO GONZALO PIAGUAJ
PAYAGUAJE, FERMIN PIAGUAJE PAYAGUAJE, REINALDO LUSITANDE YAIGUAJE, LUIS AGUSTIN
PAYAGUA PIAGUAJE, EMILIO MARTIN LUSITAND YAIGUAJE, SIMON LUSITANDE YAIGUAJE,
ARMANDO WILFRIDO PIAGUA PAYAGUAJE, ANGEL JUSTINO PIAGUAG LUCITANT, KEMPERI
BAIHUA HUANI, AHUA BAIHUA CAIGA, PENTIBO BAIHUA MIIPO, DABOTA TEGA HUANI,
AHUAME HUANI BAIHUA, APARA QUEMPERI YATE, BAI BAIHUA MIIPO, BEBANCA TEGA HUANI,
COMITA HUANI YATE, COPE TEGA HUANI, EHUENGUINTO TEGA, GAWARE TEGA HUANI,
MARTIN BAIHUA MIIPO, MENCAY BAIHUA TEGA, MENEMO HUANI BAIHUA, MIIPO YATEHUE
KEMPERI, MINIHUA HUANI YATE, NAMA BAIHUA HUANI, NAMO HUANI YATE, OMARI APICA
HUANI, OMENE BAIHUA HUANI, YEHUA TEGA HUANI, WAGUI COBA HUANI, WEICA APICA
HUANI, TEPAA QUIMONTARI WAIWA, NENQUIMO VENANCIO NIHUA, COMPA GUIQUITA,
CONTA NENQUIMO QUIMONTARI, DANIEL EHUENGEI, NANTOQUI NENQUIMO, OKATA QUIPA
NIHUA, CAI BAIHUA QUEMPERI, OMAYIHUE BAIHUA, TAPARE AHUA YETE, TEWEYENE
LUCIANA NAM TEGA, ABAMO OMENE, ONENCA ENOMENGA, PEGO ENOMENGA, WANE IMA,
WINA ENOMENGA, CAHUIYA OMACA, MIMA YETI,
Defendants,
ANDREW WOODS, LAURA J. GARR, H5,
Respondents.
TABLE OF CONTENTS
TABLE OF AUTHORITIES ................................................................................... v
INTRODUCTION .................................................................................................. 1
JURISDICTIONAL STATEMENT....................................................................... 3
STATEMENT OF THE ISSUES ........................................................................... 4
STATEMENT .......................................................................................................... 5
I. For two decades, Ecuadorian rainforest communities seek—and
ultimately win—a judgment holding Chevron responsible for
dumping billions of gallons of toxic waste into the Amazon .....................5
A.
Chevron pollutes the Ecuadorian Amazon (1970s &
1980s).............................................................................................5
B.
Ecuadorians bring an environmental case against
Chevron in New York, and Chevron convinces the court
to dismiss the case by promising to satisfy any Ecuadorian
judgment against it (1993-2002) ....................................................8
C.
Disregarding its promises to this Court, Chevron
repeatedly tries to thwart the Ecuadorian case (20032010) ............................................................................................11
D.
Hundreds of site inspections and expert reports—
including those from Chevron’s own experts—confirm
Chevron violated the law (2006-10) ............................................20
E.
Chevron shifts its strategy to collateral attacks outside
Ecuador and adopts the “demonize Donziger” playbook
(2007-2011)..................................................................................21
F.
Chevron obtains unprecedented discovery in U.S. courts..........24
G.
Chevron uses the vast “universe” of documents it
obtained in discovery to carry out its “demonize
Donziger” strategy ......................................................................29
H. The Ecuadorian court enters a preliminary judgment
against Chevron (February 2011) ...............................................33
i
II.
I.
The Ecuadorian court clarifies its judgment (March 2011) ........36
J.
Chevron declines to challenge the preliminary judgment
under Ecuador’s Collusion Prosecution Act ...............................36
K.
An Ecuadorian three-judge court reviews the case de
novo and enters a substitute judgment against Chevron
(2012) ...........................................................................................38
L.
The Ecuadorian Supreme Court grants “cassation”
review, affirms liability, and reduces damages (2013) .................39
Chevron brings this action as yet another collateral, preemptive
attack on enforcement of the Ecuadorian judgment ...............................40
A.
Chevron files this action ..............................................................40
B.
The district court grants a temporary restraining order .............42
C.
The district court issues a worldwide injunction.........................44
D.
This Court, in Chevron v. Naranjo, promptly reverses the
injunction and orders dismissal of the severed ninth claim ........46
E.
Chevron immediately attempts to evade Naranjo ........................47
F.
The district court refuses to allow the defendants to drop
their collateral-estoppel defenses .................................................48
G.
The court allows Chevron to drop its “sham litigation”
claim ............................................................................................48
H. Chevron forces Donziger to proceed pro se and drops its
damages claim on the eve of trial to avoid a jury .......................50
III. After a seven-week bench trial, the district court again issues a
decision preemptively nullifying the Ecuadorian judgment ....................51
A.
The court holds a seven-week bench trial ...................................51
1.
Chevron’s allegations of impropriety regarding the
judgment ...........................................................................52
ii
B.
2.
Chevron’s allegations of fraud regarding the
Cabrera Report.................................................................61
3.
Chevron’s allegation that the Ecuadorian judiciary
is corrupt. ..........................................................................64
The court issues its decision ........................................................65
STANDARD OF REVIEW ................................................................................... 67
SUMMARY OF ARGUMENT ............................................................................ 68
ARGUMENT ......................................................................................................... 69
I. Because Chevron lacks standing, the district court lacked
jurisdiction to issue its opinion and judgment. ........................................69
A.
II.
Chevron cannot show that the alleged trial-level
misconduct caused the substitute judgment of the threejudge appellate court. ..................................................................72
1.
The appellate court’s substitute judgment—the
product of a de novo review of the record—breaks
any causal link between alleged trial-level
improprieties and Chevron’s injuries................................73
2.
The district court’s conclusion about the standard of
review contradicts Ecuador’s highest court on a
question of Ecuadorian appellate procedure. ...................75
B.
Chevron failed to demonstrate any concrete injuries that
could be redressed by the relief sought. ......................................79
C.
Because the district court lacked jurisdiction to hear this
case, its findings—particularly findings related to
professional misconduct—should be vacated. ............................82
Chevron’s collateral attack on the Ecuadorian judgment violates
bedrock international-comity principles and is authorized by
neither state nor federal law. ...................................................................84
A.
The district court’s “non-statutory” analysis provides no
legitimate basis to circumvent Naranjo. ........................................86
iii
B.
The federal RICO statute does not provide a vehicle for
collaterally attacking a judgment—let alone the judgment
of a foreign sovereign’s court system. ..........................................94
III. Chevron’s wholesale attack on the integrity and competence of the
Ecuadorian judiciary is foreclosed by judicial estoppel, offensive to
international comity, and contradicted by Chevron’s own
evidence. ..................................................................................................99
A.
Chevron’s arguments that Ecuador’s judiciary is
systemically unfair are estopped by its directly contrary
stance during the Aguinda litigation. ..........................................100
B.
Chevron’s promise to submit to Ecuadorian jurisdiction
further estops it from arguing that it should not be subject
to the Ecuadorian judgment, and the defenses it reserved
do not apply here. .....................................................................103
C.
Chevron’s own evidence suggests that Ecuador’s situation
has improved since the time Chevron characterized its
judiciary as adequate and promised to submit to its
jurisdiction. ................................................................................105
IV. Even setting aside the lack of jurisdiction or legal authority,
Chevron had no cause of action under RICO and RICO does not
authorize any of the relief granted by the district court. .......................110
A.
The relief granted by the district court pushes RICO’s
already strained language far beyond the breaking point.........110
B.
The district court did not find that Chevron satisfied
RICO’s statutory prerequisites for a private right of
action. ........................................................................................113
C.
The absence of any authorization for equitable relief in
RICO’s civil-remedies provision, far from justifying a
judgment for Chevron, is an independent reason for
rejecting Chevron’s claims. .......................................................116
CONCLUSION ................................................................................................... 119
iv
TABLE OF AUTHORITIES
Cases
Aguinda v. Texaco, 945 F. Supp. 626 (S.D.N.Y. 1996) .................................................8
Aguinda v. Texaco, Inc., 142 F. Supp. 2d 534 (S.D.N.Y. 2001) ........................ 9, 10, 76
Aguinda v. Texaco, Inc., 303 F.3d 470 (2d Cir. 2002) ........................................... passim
Anza v. Ideal Steel Corporation, 547 U.S. 451 (2006) ..................................................114
Attorney Gen. of Canada v. R.J. Reynolds Tobacco Holdings, Inc., 268 F.3d
103 (2d Cir. 2001) ................................................................................................99
Banco Do Brasil v. Madison S. S. Corp., 307 N.Y.S.2d 341 (N.Y. Sup. Ct.
1970) .....................................................................................................................90
Bank Melli Iran v. Pahlavi, 58 F.3d 1406 (9th Cir. 1995) ..........................................109
Bechtel v. Competitive Technologies, Inc., 448 F.3d 469 (2d Cir. 2006) ...........................67
Bridgeway Corp. v. Citibank, 201 F.3d 134 (2d Cir. 2010) ................................ 101, 109
Chevron Corp. v. Donziger, 768 F. Supp. 2d 581 (S.D.N.Y. 2011) ........................ 44, 45
Chevron v. Naranjo, 667 F.3d 232 (2d Cir. 2012) ................................................. passim
CIBC Mellon Trust Co. v. Mora Hotel Corp. N.V., 792 N.E.2d 155 (N.Y.
2003) .....................................................................................................................89
Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138 (2013) ..................................................80
Crouse v. McVickar, 100 N.E. 697 (N.Y. 1912) ...........................................................90
Cunningham v. BHP Petroleum Great Britain PLC, 427 F.3d 1238 (10th Cir.
2005) .....................................................................................................................82
DaimlerChrysler Corp. v. Cuno, 547 U.S. 332 (2006) ....................................................70
Denney v. Deutsche Bank AG, 443 F.3d 253 (2d Cir. 2006) ........................................113
Diorinou v. Mezitis, 237 F.3d 133 (2d Cir. 2001) ........................................................76
Earle v. McVeigh, 91 U.S. 503 (1875) .........................................................................82
v
Eli Lilly & Co. v. Roussel Corp., 23 F. Supp. 2d 460 (D.N.J. 1998).............................95
Erie R.R. v. Tompkins, 304 U.S. 64 (1938) .......................................................... 76, 88
Evans Prods. Co. v. West Am. Ins. Co., 736 F.2d 920 (3d Cir. 1984) ............................93
First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763 (2d Cir. 1994) ....................114
Gaubert v. Fed. Home Loan Bank Bd., 863 F.2d 59 (D.C. Cir. 1988) ............................98
Grossman v. Johnson, 674 F.2d 115 (1st Cir. 1982) .....................................................98
Guaranty Trust v. York, 326 U.S. 99 (1945) .................................................................88
Gulf Petro Trading Co. v. Nigerian Nat’l Petroleum, 512 F.3d 742 (5th Cir.
2008) .....................................................................................................................96
Hendrick v. H.E. Avent, 891 F.2d 583 (5th Cir. 1990) .................................................98
Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258 (1992) .............................................114
Homola v. McNamara, 59 F.3d 647 (7th Cir. 1995) ....................................................95
Hubbard v. Haley, 262 F.3d 1194 (11th Cir. 2001) ....................................................98
In re Application of Chevron Corp., 709 F. Supp. 2d 283 (S.D.N.Y. 2010) ....................26
In re Application of Chevron Corp., 749 F. Supp. 2d 135 (S.D.N.Y. 2010) ............. 26, 27
In re Application of Chevron Corp., No. 3:10-cv-00686, Dkt. 108 (M.D.
Tenn. Sept. 21, 2010) ...........................................................................................92
In re Application of the Republic of Ecuador re Diego Borja, No. C 10-00112
(N.D. Cal.) ............................................................................................................17
In re Chevron Corp., 633 F.3d 153 (3d Cir. 2011)........................................................24
In re Goldstein, 430 F.3d 106 (2d Cir. 2005)...............................................................83
In re Robinson, 151 A.D. 589, 136 N.Y.S. 548 (1st Dept. 1912) ................................83
Intellivision v. Microsoft Corp., 484 F. App’x 616 (2d Cir. 2012) ..................................68
Jota v. Texaco, Inc., 157 F.3d 153 (2d Cir. 1998) .........................................................9
vi
Kamilewicz v. Bank of Boston Corp., 92 F.3d 506 (7th Cir. 1996) .................................95
Keach v. Cnty. of Schenectady, 593 F.3d 218 (2d Cir. 2010) ..........................................83
Khallad v. Blanc, 947 N.Y.S.2d 859 (N.Y. App. Div. 2012) .......................................90
Knight v. Mooring Capital Fund, LLC, 749 F.3d 1180 (10th Cir. 2014) ........................94
Lapin v. Shulton, Inc., 333 F.2d 169 (9th Cir. 1964) ...................................................90
Leon v. Million Air, Inc., 251 F.3d 1305 (11th Cir. 2011) .........................................110
Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) ......................................... 72, 73, 79
Maharaj v. Bankamerica Corp., 128 F.3d 94 (2d Cir. 1997) ........................................101
Manez v. Bridgestone Firestone N. Am. Tire, 533 F.3d 578 (7th Cir. 2008) ....................91
McDonald v. McDonald, 239 N.Y.S. 533 (N.Y. 1930).................................................90
McLaughlin v. Am. Tobacco Co., 522 F.3d 215 (2d. Cir. 2008) ..................................113
Motorola Credit Corp. v. Uzan, 322 F.3d 130 (2d Cir. 2003) ......................................114
Murray v. Schooner Charming Betsy, 6 U.S. 64 (1804)....................................................98
National Org. for Women, Inc. v. Scheidler, 267 F.3d 687 (7th Cir. 2001) ........... 118, 119
New Hampshire v. Maine, 532 U.S. 742 (2001) ................................................ 101, 102
Oscar v. Univ. Students Coop. Ass’n, 965 F.2d 783 (9th Cir. 1992) .............................113
Overseas Dev. Bank in Liquidation v. Nothmann, 480 N.Y.S.2d 735 (N.Y.
App. Div. 1984) ....................................................................................................89
Pennzoil v. Texaco, 481 U.S. 1 (1987) .........................................................................91
Pinkley v. City of Frederick, 191 F.3d 394 (4th Cir. 1999) ............................................93
Polur v. Raffe, 912 F.2d 52 (2d Cir. 1990)..................................................................95
Religious Tech. Ctr. v. Wollersheim, 796 F.2d 1076 (9th Cir. 1986) ............................117
Republic of Ecuador v. Chevron Corp., 638 F.3d 384 (2d Cir. 2011) ........................ passim
vii
Republic of Ecuador v. ChevronTexaco Corp., 269 F. App’x 124 (2d Cir.
2008) .....................................................................................................................21
Republic of Ecuador v. ChevronTexaco Corp., 499 F. Supp. 2d 452 (S.D.N.Y.
2007) .....................................................................................................................21
Republic of Ecuador v. TestAmerica Labs. Inc., No. 4:11-mc-00088 (N.D.
Fla.) .......................................................................................................................18
Rodriguez v. Doral Mortgage Corp., 57 F.3d 1168 (1st Cir. 1995)..................................93
Rose Hall, Ltd. v. Chase Manhattan Overseas Banking Corp., 576 F. Supp.
107 (D. Del. 1983) ................................................................................................92
Schultz v. Boy Scouts of America, Inc., 480 N.E.2d 679 (N.Y. 1985) ..............................92
Sedima S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479 (1985) ........................... 115, 117, 118
Sheppard v. River Valley Fitness One, L.P., 428 F.3d 1 (1st Cir. 2005) ...........................83
Smith v. Bayer, 131 S. Ct. 2368 (2011) .......................................................................91
Sosa v. DIRECTV, Inc., 437 F.3d 923 (9th Cir. 2006) .............................................112
Spool v. World Child Int’l Adoption Agency, 520 F.3d 178 (2d Cir. 2008) .............. 67, 116
State Farm Mutual Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003) ..............................40
Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (1998) .............................................82
Trane Co. v. O’Connor Sec., 718 F.2d 26 (2d Cir. 1983) ............................................118
Trebilcox v. McAlpine, 17 N.Y.S. 221 (N.Y. App. Div. 1891) .....................................90
United States v. Aluminum Co. of Am., 148 F.2d 416 (2d Cir. 1945)..............................99
Uzdavines v. Weeks Marine, Inc., 418 F.3d 138 (2d Cir. 2005) ....................................68
Veltze v. Bucyrus-Erie Co., 154 F.R.D. 214 (E.D. Wis. 1994) ......................................91
Vendo Co. v. Lektro-Vend Corp., 433 U.S. 623 (1977) ...................................................91
Vinokur v. Penny Lane Owners Corp., 703 N.Y.S.2d 35 (N.Y. App. Div.
2000) .....................................................................................................................89
viii
Yahoo! v. La Ligue Contre Le Racisme, 433 F.3d 1199 (9th Cir. 2006)...........................91
Zimmermann, Inc. v. Challoner, 423 U.S. 3 (1975) ........................................................92
Constitutional Provisions
U.S. Const. amend. VII ...........................................................................................50
Statutes
9 U.S.C. § 201 ..........................................................................................................97
18 U.S.C. § 1962 ......................................................................................................41
18 U.S.C. § 1964 ................................................................................... 112, 116, 119
28 U.S.C. § 1291 ........................................................................................................4
28 U.S.C. § 1331 ........................................................................................................3
28 U.S.C. § 1332 ........................................................................................................3
28 U.S.C. § 1782 ............................................................................................... 19, 24
28 U.S.C. § 2283 ......................................................................................................91
Código de Procedimiento Civil, art. 288 ..........................................................................14
Código de Procedimiento Civil, art. 838 ..........................................................................73
N.Y. C.P.L.R. 5303 .................................................................................................89
N.Y. C.P.L.R. 5304(b)(6)..........................................................................................97
Rules
Federal Rule of Appellate Procedure 4(a) ..................................................................3
Federal Rule of Civil Procedure 15(b) .....................................................................93
Federal Rule of Civil Procedure 39(a)(2) ..................................................................50
Federal Rule of Civil Procedure 44.1 ......................................................................75
Federal Rule of Civil Procedure 60, 1946 Advisory Comm. Notes ........................98
ix
Federal Rule of Civil Procedure 61 .........................................................................71
Books and Articles
José Rafael Bustamente, Ecuador, in Civil Appeal Procedures Worldwide 262
(Charles Platto ed., 1992) .....................................................................................74
Lee Coppola & Nicolas DeMarco, Civil RICO: How Ambiguity Allowed
the Racketeer Influenced and Corrupt Organizations Act to Expand Beyond Its
Intended Purpose, 38 New Eng. J. on Crim. & Civ. Confinement 241
(2012) ..................................................................................................................111
Mary Cuddehe, A Spy in the Jungle, The Atlantic, Aug. 2, 2010, available
at http://bit.ly/1pUKToW .................................................................................32
Jose Delreal, Michele Bachmann: Obama rewrote Constitution, Politico (Dec.
3, 2013) ...............................................................................................................106
William Finnegan, The Secret Keeper, The New Yorker, Oct. 19, 2009,
available at http://nyr.kr/UZ94Hf .......................................................................32
Ted Folkman, Chevron, Lobbying, and Lago Agrio, Letters Blogatory (Oct.
4, 2013) ...............................................................................................................108
Christopher Helman, Chevron’s Expensive Problems, Forbes, Mar. 4, 2013
issue, available at http://onforb.es/1fFj3nk ..........................................................25
Patrick Radden Keefe, Reversal of Fortune, The New Yorker, Jan. 9,
2012, available at http://nyr.kr/1wuTEbd. ......................................................8, 21
Doug M. Keller, Interpreting Foreign Law Through an Erie Lens, 40 Tex.
Int’l L. J. 157 (2004) .............................................................................................76
Judith Kimerling, Amazon Crude 33 (1991)..................................................................5
Judith Kimerling, Disregarding Environmental Law: Petroleum Development in
Protected Natural Areas and Indigenous Homelands in the Ecuadorian Amazon,
14 Hasting Int’l & Comp. L. Rev. 849 (1991). ......................................................5
Clifford Krauss, Revelation Undermines Chevron Case in Ecuador, N.Y.
Times, Oct. 30, 2009, available at http://nyti.ms/T9R1Ne ................................16
x
John H. Langbein, The German Advantage in Civil Procedure, 52 U. Chi. L.
Rev. 823 (1985) ....................................................................................................74
John Henry Merryman & Rogelio Pérez-Perdomo, The Civil Law
Tradition: An Introduction to the Legal Systems of Western Europe and Latin
America 121 (3d ed. 2007) ......................................................................................74
Ralph Nader, The Rule of Law or the Rule of Men?, The Huffington Post
(Feb. 5, 2013) ......................................................................................................106
Simon Romero & Clifford Krauss, Chevron Offers Evidence Of Bribery
Scheme In Ecuador Lawsuit, N.Y. Times, Sept. 1, 2009, available at
http://nyti.ms/1oJV15Q.....................................................................................16
Charles Wright & Arthur Miller, Federal Practice & Procedure (3d ed.
2014) .............................................................................................................. 76, 90
xi
INTRODUCTION
For the second time, the district court has granted Chevron an extraordinary
injunction. It bars collection anywhere on the globe of an Ecuadorian court’s
judgment in favor of Ecuadorian citizens, based on Ecuadorian law, arising from
pollution of the Ecuadorian rainforest. Last time, this Court warned the district
court not to sit as a “transnational arbiter” and “dictate to the entire world which
judgments are entitled to respect and which countries’ courts are to be treated as
international pariahs.” Chevron v. Naranjo, 667 F.3d 232, 242 (2d Cir. 2012). This
time, Chevron circumvented that warning by painting the rainforest communities’
two-decade-long quest for justice as a RICO conspiracy.
Drawing on its bottomless war chest, Chevron has shifted the focus from its
own wrongdoing in the Amazon to trumped-up allegations of corruption and
misconduct against the Ecuadorian trial judge, advocates for the rainforest
communities, and every branch of Ecuador’s government. In pursuing this effort,
Chevron has left no stone unturned, amassing staggering discovery—hundreds of
hours of raw footage from a documentary filmmaker, two decades’ worth of
litigation files, and even the personal diary of the American lawyer, Steven
Donziger, at whom Chevron takes principal aim. Chevron’s strategy, in its own
words: “demonize Donziger.”
1
The scale of Chevron’s efforts to avoid compensating its victims is
breathtaking. But nobody should lose sight of the one thing that Chevron has
chosen not to litigate: the fact that Chevron dumped billions of gallons of toxic
waste across a region roughly the size of Rhode Island. Instead, Chevron has
sought to reduce this long-running controversy to allegations that an expert report
was prepared improperly and that an Ecuadorian trial judge was influenced
inappropriately. As to the first, Ecuador’s Supreme Court found that Chevron
could point to no law or procedure that had been violated. As to the second,
Chevron’s case rested on a paid witness who admitted to making false statements to
sweeten his deal with Chevron—a deal that has netted him well over a million
dollars in benefits. If anyone here is guilty of bribery, it isn’t Steven Donziger.
But the bigger problem with Chevron’s alleged trial-level improprieties is
that they have nothing to do with the Ecuadorian judgment that Chevron is
attacking. A three-judge appellate court in Ecuador, consistent with the nation’s
civil-law system, conducted a de novo review of the full record—the equivalent of a
retrial—and produced a substitute judgment. Chevron is akin to a criminal
defendant who has been given a retrial and has been convicted again but still
complains of alleged irregularities in the first trial.
Aware of this fatal causation problem, the district court had a backup
argument. Just as it did the last time, the court condemned the entire Ecuadorian
2
judiciary, top to bottom, as incapable of producing decisions worthy of respect.
And it did so based on the testimony of an avowed political opponent of Ecuador’s
current president. The district court’s unseemly display of American judicial
imperialism is bad enough, and has already caused diplomatic friction. But it is
intolerable in light of the history of this litigation: The only reason the case was
tried in Ecuador in the first place is that Chevron got what it asked for.
For nearly a decade, Chevron showered praise on Ecuador’s judiciary,
extolling its virtues to persuade this Court to move the case from New York to
Ecuador. That effort succeeded, but only after Chevron promised to satisfy any
Ecuadorian judgment subject only to the right to raise a defense in future
enforcement proceedings. That promise has to mean something. Because it is
“enforceable against Chevron in . . . any future proceedings between the parties,”
Republic of Ecuador v. Chevron Corp., 638 F.3d 384, 389 n.4 (2d Cir. 2011), it should
preclude Chevron from once again changing the forum and stringing its victims
along across decades, courtrooms, and continents.
JURISDICTIONAL STATEMENT
The district court asserted subject-matter jurisdiction under 28 U.S.C.
§§ 1331 and 1332. The appellants in No. 18-826 timely appealed on April 1, 2014
from the district court’s opinion and judgment of March 4, 2014. Fed. R. App. P.
4(a). As explained in the argument below, the district court lacked subject-matter
3
jurisdiction because Chevron lacks Article III standing. This Court has jurisdiction
under 28 U.S.C. § 1291.
STATEMENT OF THE ISSUES
1.
In light of the Ecuadorian appellate court’s substitute judgment and
the lack of any concrete injury to Chevron that is likely to be redressed by the
district court’s judgment, does Chevron lack Article III standing?
2.
In light of Chevron v. Naranjo, 667 F.3d 232 (2d Cir. 2012), and
principles of international comity, is Chevron’s preemptive collateral attack on the
substitute Ecuadorian judgment permissible under the common law or RICO?
3.
Is Chevron’s wholesale attack on the Ecuadorian judiciary foreclosed
by judicial estoppel and international-comity principles and contradicted by
Chevron’s own evidence?
4.
Given RICO’s injury and causation requirements and the absence of
any authorization for equitable relief, should the district court have dismissed
Chevron’s RICO claims in their entirety?
4
STATEMENT
I.
For two decades, Ecuadorian rainforest communities seek—and
ultimately win—a judgment holding Chevron responsible for
dumping billions of gallons of toxic waste into the Amazon
A.
Chevron pollutes the Ecuadorian Amazon (1970s & 1980s)
From 1972 to 1990, Chevron drilled for oil in an area of the Ecuadorian
rainforest roughly the size of Rhode Island.1 The Oriente region, where this drilling
took place, had been “known and revered for [its] high levels of biological diversity”
and was “surely the richest biotic zone on Earth.”2 It also “has a rich heritage of
indigenous cultures, and is home to eight groups of indigenous people” who have
lived in the region “for thousands of years in harmony with their rain forest
environment.”3
Rather than take special care to protect this region, Chevron dug hundreds
of unlined waste pits into the jungle floor and filled them with toxic drilling muds
and other oil-field waste, including a host of well-known carcinogens—contrary to
the prevailing industry practice of pumping waste back into well cavities deep
Although it was Texaco that owned and operated the oil fields in Ecuador,
Texaco became a wholly owned subsidiary of Chevron in 2001, and between 2001
and 2005 the combined company was known as ChevronTexaco. Republic of
Ecuador v. Chevron Corp., 638 F.3d 384, 387 n.1 (2d Cir. 2011). We refer to both
companies as “Chevron” unless otherwise noted.
2 Judith Kimerling, Amazon Crude 33 (1991).
3 Judith Kimerling, Disregarding Environmental Law: Petroleum Development in
Protected Natural Areas and Indigenous Homelands in the Ecuadorian Amazon, 14 Hasting
Int’l & Comp. L. Rev. 849, 853 (1991).
1
5
underground, where the waste can’t harm the environment. Because the pits were
unlined, Chevron’s toxic chemicals leached into the surrounding soils and
groundwater. And Chevron built pipes into the sides of many of its pits so the toxic
contents could easily flow into nearby streams relied on by the local population for
drinking water. By design, Chevron’s drilling activities discharged billions of gallons
of toxic production water directly into the local waterways of the Amazon basin.
Chevron does not contest any of these facts. To the contrary, Chevron has
admitted that it dumped three million gallons of production waters daily into
Amazon waterways, totaling 15.834 billion gallons. A-3139.202. And Chevron’s
internal memoranda reveal that the company eschewed modern wastemanagement practices used in the United States in favor of cheaper, outdated, and
dangerous methods—which Chevron’s own investigators concluded “cannot be
considered ‘good practice.’” A-1910. An internal memo from 1980, for example,
notes that Chevron had studied “the cost and necessity of eliminating possible
contamination of the environment by the earthen pits used in the drilling,
producing, and workover operations in the Oriente Region.” A-2072. Even though
the unlined pits fell below industry standards, the memo “recommended that the
pits neither be fenced, lined, or filled”—solely because of “cost” (less than $5
million). A-2072-73.
6
Another memo, written by a Texaco executive in 1972, directed company
employees to take steps to conceal misconduct by not reporting oil spills and other
environmental incidents unless the media or government became independently
aware of them: “Only major events … are to be reported. … A major event is
further defined as one which attracts the attention of press and/or regulatory
authorities.” A-2071. The memo also ordered the destruction of records: “No
reports are to be kept on a routine basis and all previous reports are to be removed
… and destroyed.” Id. These policies remained in effect throughout the relevant
period.
Two decades later, as it was winding down operations in Ecuador in the
early 1990s, Chevron commissioned a study that found “contamination of soil and
water … at well sites, production stations and along roadways, flowlines and
secondary pipelines.” A-2306. It also found evidence of oil spills at 97% of the sites
assessed—158 out of 163—and numerous violations of Ecuadorian law. A-3182-85.
The firm that conducted the study recommended that Chevron conduct a
comprehensive environmental investigation to determine the full scope of the
company’s liability. A-3187. Chevron never did so.
Instead, Chevron fled the country, leaving behind hundreds of open pits full
of toxic sludge in the backyard of the Amazonian communities. A-2333. These
communities, which depend on local waterways for virtually every facet of their
7
lives, have been continuously exposed to toxic and hazardous chemicals not only
through their drinking water, but also by cooking, bathing, and washing with
contaminated water, by consuming contaminated fish and livestock, and in
numerous other ways. Id. The harm done by this ongoing exposure can “be
measured in cancer deaths, miscarriages, birth defects, dead livestock, sick fish, and
the near-extinction of several tribes.” Patrick Radden Keefe, Reversal of Fortune, The
New Yorker, Jan. 9, 2012, available at http://nyr.kr/1wuTEbd.
B.
Ecuadorians bring an environmental case against Chevron
in New York, and Chevron convinces the court to dismiss
the case by promising to satisfy any Ecuadorian judgment
against it (1993-2002)
In 1993—one year after Chevron shuttered its Ecuadorian operations—the
victims of its pollution (indigenous people and farmers, known as the afectados) sued
Chevron in the Southern District of New York, alleging that they and their families
had various physical injuries and seeking relief to redress environmental
contamination. See Aguinda v. Texaco, 945 F. Supp. 626 (S.D.N.Y. 1996).
For the next nine years, Chevron fought vigorously to have the case
dismissed on forum non conveniens grounds, heaping praise on the Ecuadorian
judiciary and swearing by its impartiality and independence.4 “Ecuador’s courts,”
Chevron went so far as to “work[] with” the Ecuadorian ambassador to the
United States to ghostwrite a letter to the State Department requesting that it
support dismissal. A-410. The letter argued that litigating the case in New York
(continued…)
4
8
Chevron maintained, “conduct and adjudicate cases filed by or against
multinationals and oil companies in a fair and impartial manner”; a “history of
corruption-free litigation” would “assure a fair adjudication if plaintiffs refile their
claims in Ecuador.” Aguinda, RJN Ex. A at 3 (S.D.N.Y. Apr. 24, 2000). In 1996, the
district court (Rakoff, J.) granted Chevron’s motion to dismiss. Id. But this Court
reversed, holding that the case may not be dismissed on forum non conveniens grounds
unless Chevron submitted itself to jurisdiction in Ecuador. Jota v. Texaco, Inc., 157
F.3d 153, 155, 159-60 (2d Cir. 1998).
On remand, Chevron “provided the missing commitment” to submit to the
Ecuadorian courts and “renewed its motion to dismiss.” Aguinda v. Texaco, Inc., 142
F. Supp. 2d 534, 538 (S.D.N.Y. 2001). It “unambiguously agreed in writing to
being sued on [the plaintiffs’] claims (or their Ecuadorian equivalent) in Ecuador,
to accept service of process in Ecuador, and to waive for 60 days after … dismissal
any statute of limitations-based defenses that may have matured since the filing of
the [case].” Id. at 539. Chevron “also offered to satisfy any judgments in Plaintiffs’
favor, reserving its right to contest their validity only in the limited circumstances
“would do violence to the international procedural system” because U.S. courts
“lack the authority and knowledge needed to consider and judge matters
concerning foreign laws and their application,” which should “belong[] exclusively
to Ecuadorian courts.” A-347-48; A-411; A-417. The letter also explained that it
“would be highly offensive” and “false” if a U.S. court were to hold that litigants
“cannot expect a fair hearing in Ecuadorian courts.” A-418.
9
permitted by New York’s Recognition of Foreign Country Money Judgments Act,”
N.Y. C.P.L.R. §§ 5301-09 (hereafter “Recognition Act”). Republic of Ecuador, 638
F.3d at 389.
Relying on these promises, the district court again dismissed the case. It held
that the case has “everything to do with Ecuador and nothing to do with the
United States,” that Ecuador’s judiciary provides the “modicum of independence
and impartiality necessary to an adequate alternative forum,” and that “the courts
of Ecuador are in the best position to find and apply their own law.” Aguinda, 142 F.
Supp. 2d at 537, 545-46, 552.
This Court affirmed. It rejected the plaintiffs’ criticism of Ecuador’s judiciary
as “subject to corrupt influences” and “incapable of acting impartially,” and
“found Ecuador to be an adequate forum for hosting tort suits” because its courts
are “sufficiently independent and impartial to provide due process.” Aguinda v.
Texaco, Inc., 303 F.3d 470, 475, 477-78 (2d Cir. 2002). In granting Chevron its
requested relief and relying on its promises, this Court adopted those promises,
which then became “enforceable against Chevron in . . . any future proceedings
between the parties.” Republic of Ecuador, 638 F.3d at 389 n.4. As a result, the
Recognition Act is “the sole reserved route for Chevron to challenge any final
judgment resulting from the Lago Agrio litigation.” Id. at 399.
10
C.
Disregarding its promises to this Court, Chevron
repeatedly tries to thwart the Ecuadorian case (2003-2010)
The Aguinda plaintiffs then did exactly what Chevron had said it wanted
them to do. In 2003, they refiled their claims against Chevron in the Corte Provincial
de Justicia de Sucumbíos—a small courthouse in Lago Agrio, Ecuador, a town that
once served as a hub of Chevron’s Ecuadorian operations. See id. at 390 n.5. But
Chevron—now outside the reach of this Court—immediately broke its promise
and contested jurisdiction in Ecuador. And early on, Chevron lawyer Ricardo Reis
Veiga tried to torpedo the litigation by persuading the country’s Attorney General
to call the trial judge and urge him to throw out the lawsuit. See, e.g., A-422-23.
When a reporter later asked what forum Chevron preferred, a company
spokesperson answered: “We didn’t want to get sued, period. We don’t want to be
in any court, much less a court with respect to this kind of claim, which we consider
to be frivolous.” ECF No. 47-21.
As it would turn out, this was only the beginning. Time and again, as the
Ecuadorian case moved forward, Chevron sought to delay or corrupt the
proceedings by manipulating testing sites, clogging the courts with repetitive filings,
and forcing the recusal of judges who were either unable to keep up with Chevron’s
document-dump strategy or were falsely accused by Chevron of accepting bribes.
1. The judicial site inspections. At the heart of the Ecuadorian
environmental case against Chevron was a series of dozens of “judicial site
11
inspections”—where, under the supervision of the judge, the parties’ experts
collected soil and water samples at the well sites and operating stations, while
attorneys for both sides made public arguments and submitted evidence. SPA-64;
A-1039. During these inspections, the parties hand-submitted an enormous
number of documents to the court. This process was not always orderly, and
although these documents were supposed to be logged into the official record, the
court’s small administrative support staff often struggled to keep up and frequently
made mistakes. On one occasion, for example, Chevron filed dozens of motions on
a single day—four of which were not logged into the official record. The staff
bunched the documents they received into small stacks (or cuerpos) that were “sewed
with a thick thread” or “fixed with elastic bands to avoid scattering around” and
then manually maintained over an eight-year period. ECF No. 1413-10. By the
end, the record exceeded 200,000 pages.
2. Testing-site manipulation. Chevron went to great lengths to sabotage
the site inspections. It conducted secret pre-inspection testing of various sites to predetermine “safe” sampling locations within the contemplated inspection sites,
hoping to conceal the true extent of the contamination. A-1874.
Chevron’s experts once secretly conducted pre-inspection sampling at a
critical site called Guanta Station. A-3209-10. What they found worried them:
Their sampling revealed unusually high levels of contamination, including high
12
levels of arsenic, chromium, and polycyclic aromatic hydrocarbons (or PAHs,
many of which are well-known carcinogens). Id. This was particularly worrisome to
Chevron because the Guanta site was one of the last fields discovered and
developed. If it was contaminated because of substandard practices, then all sites
were likely contaminated. See A-3210.
So Chevron requested that the Ecuadorian court cancel the Guanta
inspection. But it didn’t stop there: The day before the inspection was set to take
place, Chevron’s lawyers rushed to the court armed with what the company
claimed was a military intelligence report calling for the suspension of the
inspection to avert a threatened riot. A-1091-93; A-1918; A-2080. That report, it
later became clear, was fake. An investigation by an Ecuadorian intelligence
agency confirmed that the report had been improperly obtained at the request of
Chevron’s security officer—unsupported by actual intelligence. A-1920. The
agency further explained that it had never received or reported any threat in
connection with the scheduled inspection. Id. Nevertheless, Chevron’s ploy worked:
Unaware that the report was bogus, the Court granted Chevron’s last-minute
request and suspended the inspection, causing substantial delay.
3. Chevron’s document-dump strategy. Chevron’s gamesmanship
extended beyond the systematic disruption and delay of the discovery process. It
was also designed to create the appearance of supposedly unfair treatment and
13
due-process violations. One example is Chevron’s vexatious document-dump
strategy, which aimed to take advantage of a unique feature of Ecuadorian law—
the statutory requirement that a judge must act on any motion within three days.
Any judge who fails to do so may be recused from the case, while any who takes
more than nine days must withdraw.5
Chevron abused this obscure procedural rule by repeatedly filing multiple
motions to delay the proceedings and force successive judges who presided over the
case to withdraw. To give just two examples: On August 5, 2010, minutes before
the court closed, Chevron filed 17 motions in rapid-fire succession, the majority of
which challenged the same ruling. A-1934-2013. And on October 14, 2010,
Chevron filed 39 motions within a 50-minute window, each one separately
addressing different aspects of a court order issued three days earlier. A-2014.
Notably, only 35 of these motions made it into the official court record—an
illustration of the difficulty the court’s tiny administrative staff had in formally
processing all the paper thrust upon it.6
Código de Procedimiento Civil, art. 288 (requiring that “court orders [be issued]
within three days”); id. art. 856 (providing for recusal of judge if “[h]e does not hear
the case within three times the time period provided for by law”).
6 As the Republic of Ecuador recently explained, “Cuerpo 1989 ends with
Chevron’s Motion filed at 5:44 PM—the 35th of 39 Chevron filed that evening.
Cuerpo 1990 starts with the Court’s Order addressing those 39 motions.” A-2168 at
n.35.
5
14
Chevron’s filings were also regularly accompanied by the submission of
thousands of documents. Any court would have difficulty handling this deluge, and
the Ecuadorian court was no exception. It found that Chevron’s tactic was
improper and that most of its massive submissions were irrelevant or time-barred.
Yet the tactic has persisted throughout this sprawling litigation: As the three-judge
Corte Provincial would later note in criticizing Chevron’s “abusive,” “overtly
aggressive[,] and hostile” approach, the many “thousands [of] documents
submitted by Chevron Corporation bloated the case … so much that at this stage
alone there were almost two hundred record binders (about twenty thousand pages),
not counting the more than two hundred thousand papers in the first instance case.”
A-454; A-467.
4. Chevron’s first concocted “bribery” allegation. In an effort to
cause the presiding judge’s removal from the case—this time on the eve of an
anticipated judgment—a long-time Chevron contractor named Diego Borja and a
convicted felon named Wayne Hansen sought to entrap the judge (Judge Núñez) in
an elaborate “bribery” scheme in which he was secretly videotaped. Based on the
recording, Chevron launched a public-relations campaign accusing Judge Núñez of
bribery. It triumphantly declared in August 2009 that it had obtained recordings
“reveal[ing] a $3 million bribery scheme implicating” the judge presiding over the
case. Chevron Press Release, Videos Reveal Serious Judicial Misconduct and Political
15
Influence in Ecuador Lawsuit (Aug. 31, 2009), available at http://bit.ly/1l4kx26.
Chevron said that the two men who recorded the scheme—Borja and an
“American
businessman,”
according
to
Chevron—were
environmental-
remediation contractors “pursuing business opportunities in Ecuador” who had
happened upon “serious judicial misconduct.” Id. Chevron claimed that the videos
showed that the two men were able to coax the judge into revealing that he would
rule in favor of the Ecuadorian plaintiffs. Id.; see also Simon Romero & Clifford
Krauss, Chevron Offers Evidence Of Bribery Scheme In Ecuador Lawsuit, N.Y. Times, Sept.
1, 2009, available at http://nyti.ms/1oJV15Q.
None of that was true. To begin with, neither Borja nor Hansen was an
environmental remediation contractor. ECF No. 175-10. Borja was still under
contract with Chevron at the time, charged with handling litigation-related
laboratory samples and moving Chevron laboratory equipment. CA-41. His spouse
had also been a Chevron contractor, while his uncle was “the legal representative
for the company.” Id.; A-1601. And Hansen was a convicted felon and drugtrafficker. See Clifford Krauss, Revelation Undermines Chevron Case in Ecuador, N.Y.
Times, Oct. 30, 2009, available at http://nyti.ms/T9R1Ne. Moreover, the
recordings show that Judge Núñez never asked for and was never offered a bribe of
any kind and repeatedly declined invitations to say which way he intended to rule.
CA-41. Indeed, the only U.S. judge who reviewed the transcripts and commented
16
on them said that he saw no evidence of a bribe. See Hearing Tr. 11/10/10, at
38:19-39:5, In re Application of the Republic of Ecuador re Diego Borja, No. C 10-00112
(N.D. Cal.) (“[T]here was no hint in there about him taking a bribe.”).
After the tapes were released, Chevron publicly distanced itself from Borja.
It represented to the Ecuadorian court that his “[w]ork [for Chevron] had already
concluded” and that his “functions had nothing to do with the sampling process.”
ECF No. 366-22 at 2. But that too was untrue: Borja was still working as Chevron’s
“Sample Manager” for the “Litigation Team” even after his failed bribery
allegation. CA-45.
What is true, however, is that Borja’s own, unguarded statements at the time
implicate Chevron—not Judge Núñez—in illegal activity. Between August and
October 2009, Borja’s childhood friend, Santiago Escobar, recorded conversations
in which Borja conceded that the bribery scheme was illusory. A-1547; A-1564; A1580; A-1595; see also ECF No. 152-2 (“Because really, there was no bribe. I mean
there was never … there was never a bribe.”). Borja also asserted that Chevron,
among other things, “cooked” the evidence in the Ecuadorian case, used labs that
were supposedly independent but actually belonged to Chevron, and generally
engaged in misconduct that, if publicly revealed, would cause the courts to “close
[Chevron] down.” A-1585-90. Borja explained:
I have the [e]mails. … I have correspondence that talks about things
you can’t even imagine, dude … I can’t talk about them here, dude,
17
because I’m afraid, but they’re things that can make the Amazons win
this just like that [snapping fingers]. … [W]hat I have is conclusive
evidence, photos of how they managed things internally.
A-1571-72. Escobar subsequently testified under oath in Ecuador that, according
to Borja, Chevron knowingly substituted soil samples taken from contaminated well
sites with clean soil taken from areas 10 to 20 kilometers away. Office of Public
Prosecution of the Republic of Ecuador, Ex. 39, ECF No. 1-41, filed in Republic of
Ecuador v. TestAmerica Labs. Inc., No. 4:11-mc-00088 (N.D. Fla.). Finally, Borja made
clear that if Chevron did not look after him, he would publicly reveal the
company’s misdeeds. ECF No. 152-2 (“[I]f something bad happened to me … and
they don’t give my wife what they have to … There’s a document for that, where I
… immediately go to the other side.”).
Chevron apparently took the threat seriously. Borja and his family were
plucked from Ecuador shortly after the recordings were made public and installed
in a gated community roughly one mile from Chevron’s California headquarters.
ECF No. 152 at 26. Chevron provided furnishings, a car, and a cell phone, as well
as a job for Borja’s wife. CA-46. Through counsel, Chevron also pays Borja’s
monthly rent, characterized as “Witness Rent Payments,” as well as other perks
and benefits. CA-13-40; see also ECF Nos. 174-44, 174-51, 174-52. Chevron has
even paid Borja’s state and federal income taxes. ECF Nos. 174-56, 174-57. And
although Borja performs no work for Chevron, the company gives him a $5,000 to
18
$10,000 monthly “stipend.” See ECF Nos. 174-2, 174-6, 174-10, 174-16, 174-18,
174-19, 174-26, 174-36, & 174-58; A-3155. Altogether, Chevron gave Borja more
than $2.2 million in benefits in the first 29 months after he was relocated. CA-47.
As he put it, “crime does pay.” A-1553. Chevron’s money seems to be well spent:
In 2010, under the supervision of Chevron’s counsel, Borja signed two declarations
ostensibly renouncing his previously recorded statements. CA-2; CA-5.
As for Chevron’s “American businessman,” convicted felon Wayne Hansen,
he too threatened to reveal information damaging to Chevron if the company did
not improve his situation. CA-1. It is unclear whether his wish was granted, but this
much is clear: The Republic of Ecuador filed a 28 U.S.C. § 1782 discovery
application against Hansen in his home state of California in September 2010; he
never showed up, and by the next month was living a life of leisure in a Peruvian
beach town, in the market for a beach house with maid service and a private chef.
CA-8.
Notwithstanding the falsity of Chevron’s bribery charges, they nevertheless
achieved their intended result: Although Judge Núñez denied any wrongdoing, he
recused himself to eliminate any appearance of impropriety—thereby delaying
final resolution of the case for another eighteen months. See A-360-61.
19
D.
Hundreds of site inspections and expert reports—including
those from Chevron’s own experts—confirm Chevron
violated the law (2006-10)
Despite Chevron’s best efforts to distract attention from its wrongdoing—
and despite its unlimited resources—Chevron could not combat the growing
mountain of evidence showing the devastating and widespread environmental
contamination caused by its drilling practices. Even Chevron’s own handpicked
evidence, limited and distorted as it was, confirmed the company’s culpability. Two
of its experts found significant toxic contamination at 91% of the wells operated
solely by Chevron. A-2330. Half the sites had illegal amounts of two carcinogenic
PAHs, 90% had illegal amounts of the PAH pyrene, and 82% had illegal amounts
of naphthalene. Id. Even more damning, a number of these pits were certified as
“completely remediated” by Chevron following a sham cleanup it conducted in the
mid-1990s. A-2348-50.
Chevron also tested sediment in nearby streams and swamps, showing that
the pollution had spread and persisted almost two decades later. A-2330. Although
Chevron conducted only modest sediment sampling, more than half of its samples
showed unlawful amounts of contamination. Id. Chevron’s sampling of the surface
water showed even clearer evidence of pollution: It detected phenols—a soluble
toxic component of crude oil—at every location tested, nearly 20 years after the
drilling had stopped. A-2331.
20
E.
Chevron shifts its strategy to collateral attacks outside
Ecuador and adopts the “demonize Donziger” playbook
(2007-2011)
Unable to overcome the mounting evidence against it, and desperate to
avoid paying for its wrongdoing, Chevron shifted gears, adopting a strategy to
collaterally attack the Ecuadorian litigation in any forum possible, through any
means possible. The company’s message, according to one of its lobbyists, was
simple: “We can’t let little countries screw around with big companies like this.”
Keefe, Reversal of Fortune. “We’re going to fight this until hell freezes over,” a
company spokesman declared. Id. “And then we’ll fight it out on the ice.” Id.
1. Chevron’s opening gambit was to file an arbitration proceeding against
the Republic of Ecuador before the American Arbitration Association and then
offer to dismiss the arbitration in exchange for the government’s “intervention” in
the Ecuadorian litigation. But the district court stayed the arbitration and rejected
all of Chevron’s arguments, including its argument that Ecuador was bound by a
1960s-era joint-operating agreement that was “executed in Florida between two
American corporations.” Republic of Ecuador v. ChevronTexaco Corp., 499 F. Supp. 2d
452, 460, 469 (S.D.N.Y. 2007). This Court summarily affirmed. 269 F. App’x 124
(2d Cir. 2008).
Chevron next initiated international proceedings against Ecuador under the
U.S.-Ecuador Bilateral Investment Treaty. Republic of Ecuador, 638 F.3d at 390;
21
ECF No. 65-4. Chevron requested that a private arbitration panel—meeting in
secret without allowing the afectados to participate—declare that Chevron has “no
liability or responsibility for environmental impact … or for performing further
environmental remediation” in Ecuador and order Ecuador’s executive branch to
compel the judiciary to dismiss the case. Republic of Ecuador, 638 F.3d at 390.
Chevron made two primary arguments: (1) that its sham cleanup during the 1990s
precluded “any judgment issued against it,” and (2) that “Ecuador’s judicial branch”
has disregarded “Ecuadorian law, international standards of fairness, and
Chevron’s basic due process and natural justice rights,” and its executive branch
“improperly interfered” with the case because the current president, Rafael Correa,
expressed public “support for the plaintiffs.” Id. Chevron also asked for fees, costs,
and “moral damages.” Id. Later, Chevron submitted Borja’s secretly recorded
videotapes to the panel, claiming that they showed Judge Núñez had been bribed.
But after that scheme backfired, Chevron quietly dropped the allegation. The
panel has not yet ruled.
2. Around this time, Chevron also began to train its focus on Steven
Donziger—an American lawyer who had joined the case early in his legal career,
after working as a newspaper reporter in Latin America and, following law school,
as a public defender representing juvenile defendants and at a social-justice
nonprofit. A-3387-88. Donziger was not the only lawyer on this case; he worked
22
alongside a team of Ecuadorian lawyers, one of whom (Pablo Fajardo) was the lead
trial counsel. A-3391. But Donziger had emerged over time as a principal
spokesperson for the afectados in the United States. In the mid-to-late 2000s, hoping
to bring attention to their plight, he and Ecuadorian counsel decided to give an
acclaimed American filmmaker (Joseph Berlinger) substantial behind-the-scenes
access to make a documentary about the case, eventually entitled Crude: The Real
Price of Oil, which premiered at the Sundance Film Festival in January 2009.
Crude not only conveyed the painful saga of the afectados and their quest for
justice; it also captured the unfiltered range of Donziger’s personality: his brashness
and tendency toward hyperbole; his tenacity and passion in the service of his
clients; his courage in the face of Chevron’s unremitting attacks; and his often
irreverent, over-the-top sense of humor. When Chevron’s public-relations team
saw the film, it sensed an opportunity. After one strategist stated his belief that
Chevron “should not tread on Berlinger” because he “put some balance into the
documentary,” a company publicist, in an internal email to his colleagues, stressed
the game plan: “Our [long-term] strategy is to demonize Donziger. This film
provides us a great opportunity to do so.” CA-9-10. This came after another
Chevron strategist wrote a memo to company officials recommending that they
launch a campaign to cast Ecuador “as the next major threat to America”—like
“Iran”; a “Cuban missile crisis in the making”—and Donziger as “the most
23
powerful man in Ecuador,” “pulling the strings of an emerging banana republic.”
ECF No. 1324-11, at 10.
F.
Chevron obtains unprecedented discovery in U.S. courts
With this new strategy in place, Chevron began using a little-known U.S.
statute permitting discovery “for use” in foreign litigation, 28 U.S.C. § 1782, in an
effort to show—preemptively and somewhat “ironically,” given its earlier position
in Aguinda—that “the judicial process in Ecuador is corrupt.” In re Chevron Corp., 633
F.3d 153, 158-59 (3d Cir. 2011). Chevron also sought to expose what it claimed
was fraud in the relationship between the Ecuadorian plaintiffs’ legal team,
Donziger, and an environmental expert named Richard Cabrera who was
appointed by the Corte Provincial de Justicia de Sucumbíos to provide a report on the
economic value of damages at the plaintiffs’ request—one of many expert reports
submitted to the court throughout the litigation.
The scale of this discovery effort, like all of Chevron’s efforts to avoid
compensating its victims in Ecuador, has been breathtaking. By 2011, the company
had initiated “an extraordinary series of at least 25 requests to obtain discovery
from at least 30 different parties” in more than a dozen federal courts across the
country, In re Chevron, 633 F.3d at 159—“an effort the Third Circuit aptly
characterized as ‘unique in the annals of American judicial history,’” Naranjo, 667
F.3d at 236 (quoting In re Chevron Corp., 650 F.3d at 282 n.7). This unprecedented
24
assault was designed to isolate the plaintiffs’ contacts with Dr. Cabrera from the
context of Ecuadorian law and ultimately gain access to huge amounts of evidence
that it hoped would derail the Ecuadorian case, all the while draining the plaintiffs
of their resources by forcing them to simultaneously litigate these cases nationwide.
As Chevron CEO John Watson would later say: The litigation “will end when the
plaintiffs’ lawyers give up.” Christopher Helman, Chevron’s Expensive Problems, Forbes,
Mar. 4, 2013 issue, available at http://onforb.es/1fFj3nk.
Chevron originally based its extraordinary requests on a single scene in Crude.
The scene showed a meeting between the Ecuadorian plaintiffs and their lawyers,
including Donziger, while a member of Dr. Cabrera’s staff was present. Chevron
argued that this proved that Dr. Cabrera was not independent. Yet Chevron
identified no provision of the Ecuadorian Civil Code prohibiting a party from
communicating ex parte with a court-appointed expert, formulating a work plan for
the expert, or drafting materials for that expert’s adoption as his own. A-3545-46.
Distinguished Ecuadorian law professors have also attested that nothing in
Ecuadorian law at that time prevented a party from meeting with a courtappointed expert ex parte, planning the work the expert will perform, and drafting
proposed findings for the expert. A-424; A-440. Indeed, Chevron’s technical
consultant met with Dr. Marcelo Muñoz Herrería—a “neutral,” court-appointed
expert like Dr. Cabrera—at a hotel for a “technical planning meeting” to plan his
25
expert report. A-2075. This meeting took place before Muñoz was formally
appointed by the Ecuadorian court. Id. Dr. Muñoz also stated that his work plan
was “requested and approved” by Chevron’s technical consultant. A-2076.
Still, Chevron took advantage of American courts’ unfamiliarity with
Ecuadorian procedure to obtain an unprecedented volume of discovery in these
proceedings—at least a million documents worth. Of the 25 proceedings before 16
different judges, the two most successful were against Berlinger (the Crude
filmmaker) and Donziger. See In re Application of Chevron Corp., 709 F. Supp. 2d 283
(S.D.N.Y. 2010) (Berlinger); In re Application of Chevron Corp., 749 F. Supp. 2d 135
(S.D.N.Y. 2010) (Donziger). The Honorable Lewis A. Kaplan of the Southern
District of New York was the judge in both proceedings.
The Berlinger § 1782 proceeding. In the first proceeding, Chevron
successfully demanded all 600-plus hours of Crude outtakes. SPA-160. The court
declined a request to wait until the Ecuadorian court ruled on an application
asking whether it would be “receptive to 1782 discovery in the United States”—the
purpose of the statute. ECF No. 287-1 (Hearing Tr. 4/30/10, at 35:9-36:10). The
court did not hide why: “Believe me, if this were the High Court in London, you
can be sure I’d wait.” Id. The district court’s view, it later made clear, was that
Ecuador should wait for it, not the other way around. See ECF No. 287-5 (Hearing
Tr. 11/22/10, at 33:15-21) (“The one inescapable, overwhelmingly obvious fact in
26
this whole scenario is that Danziger [sic] and his clients, the Lago Agrio plaintiffs,
utterly refuse any delay in Ecuador to permit the proceedings here to move at a
more deliberate speed. Each and every time I have asked that question, I’ve gotten
a flat no. Don’t talk to me about urgency.”); see also id. at 26:19-24 (“[I]t’s a giant
game here. It’s a giant game. The name of the game is to string it out. … That is
the Danziger [sic] Lago Agrio strategy. And it has been from the beginning.”).
The Donziger § 1782 proceeding. In the second proceeding, the court
ordered Donziger to turn over to Chevron his entire eighteen-year litigation file—
including virtually every scrap of correspondence that he and the other lawyers had
made about the case—and to sit for fourteen days of deposition testimony. “[H]e
has one privilege left,” Chevron’s counsel told the court. “He can assert the Fifth
Amendment.” ECF No. 287-3 (Hearing Tr. 9/23/10, at 64:1-2). The court agreed
with Chevron that Donziger had waived “each and every privilege claim” because
he filed his privilege log too late. In re Chevron Corp., 749 F. Supp. 2d at 185. The
court acknowledged that the log “took a good deal of effort” to prepare—it was
over 2,000 pages and identified 8,652 documents as privileged, and Donziger did
not have a staff of associates to help him go through it—but the court nevertheless
ordered Donziger to produce “each and every document responsive to the
subpoenas (irrespective of whether any privilege or other protection against
disclosure has been or hereafter is or may be claimed) forthwith.” Id. at 184-85, 188.
27
As Judge Kaplan put it: “The subpoenas called for the universe. And I said give
them the universe.” ECF No. 287-5 (Hearing Tr. 11/22/10, at 13:10-14).7
That “universe” amounted to more than 200,000 pages of material, much of
it personal—including Donziger’s tax returns, his bank-account information, his
personal computers, mobile devices, text messages, private phone records—even a
copy of the eulogy he delivered after the death of his mother. Chevron’s lawyers at
Gibson Dunn pored through stacks of memos and emails marked “Confidential”
and “Attorney Work Product,” at a clip of 5,000 pages a day, and made complete
copies of his hard drives. When his counsel protested that this would give Chevron
access to his “communications to his wife” as well as “his communications on other
matters,” Judge Kaplan responded: “He doesn’t have any other matters. Let’s not
worry about that. This is his life.” ECF No. 287-3 (Hearing Tr. 9/23/10, at 27:610).
Chevron didn’t worry. When its lawyers scanned Donziger’s computer files,
they found his entire personal diary—a running account of his most private
thoughts, including his hopes, dreams, and doubts; his perpetual fear that Chevron
was corrupting the process; his unvarnished opinions of close professional
During an earlier hearing, Judge Kaplan opined: “[T]he likelihood that
there is actually an attorney-client communication under any of this I think is
about the same as the likelihood that the Ecuadorian Air Force is going to take
over New Jersey. Let’s get real.” ECF No. 287-3 (Hearing Tr. 9/23/10, at 36:2124).
7
28
colleagues; even his reflections on the impact his work in Ecuador was having on
his marriage. A-2513. When Chevron filed the document with the court—in its
entirety—it entered the public domain.
G.
Chevron uses the vast “universe” of documents it obtained
in discovery to carry out its “demonize Donziger” strategy
With this unprecedented quantity of material in tow, Chevron’s publicrelations operation went to work, often taking Donziger’s words out of context—
even twisting them to mean the opposite of what he said—to shift the focus from
Chevron’s wrongdoing to Donziger, which wasn’t hard to do because of his
personality and speaking style.
Chevron, for instance, has repeatedly quoted Donziger as saying: “If you
repeat a lie a thousand times it becomes the truth,” as if he were speaking about his
own beliefs. But he was talking about Chevron—not himself. What he actually wrote
was “Si repitan una mentira mil veces se hace la verdad,” accurately translated as: “if they
repeat a lie a thousand times it becomes the truth.” A-1288.6. The “they” was
Chevron/Texaco. Chevron has also constantly quoted Donziger as professing what
Chevron claims is a personal motto: “Facts do not exist. Facts are created.” See, e.g.,
ECF No. 1855, at 141. But he goes on to say: “And you talk to Texaco, because
they create facts. Texaco creates facts. They create standards. … That’s what I am
saying. They create fiction.” ECF No. 7-8, at 4 (emphasis added). In another scene,
he tells the camera that he and the afectados are:
29
going to confront the judge who we believe is paid by Texaco.
We believe he is corrupt, and we’re gonna confront him, ah,
with—with our suspicions about his corruption and let him
know what time it is. And, ah, you know, this is something that you
would never do in the United States. I mean, this is something you
would, I mean, this is just out of bounds, both in terms of judicial
behavior, and what—what lawyers would do. But Ecuador, you know,
there’s almost no rules here. And this is how the game is played, it’s
dirty. And, you know, they’re playing dirty, we’re honest,
they’re dirty. They play dirty, we have to occasionally use,
um, pressure tactics to neutralize their corruption. And
today is one of those examples.
ECF No. 6-4 at 6 (emphasis added). But when Chevron presented this clip to the
court, it excluded all the bold text above. A-1038.1. A clip in which Donziger
expresses frustration at Chevron’s corrupt practices was transformed into a clip in
which Donziger appears to admit his own corruption. The transcript that Chevron
provided to the court did not indicate with an ellipsis that 25 words had been
omitted midsentence. Id.
When Donziger’s counsel brought Chevron’s omissions to the attention of
the district court, Chevron conceded that it had doctored several clips, but blamed
the error on its transcriptionist. ECF No. 1661 at 5 (“Chevron’s transcriber … did
not realize that material had been redacted from this clip, and, as a result, she did
not note or identify the redaction in the transcript … Chevron’s counsel did not
pick up on that omission.”). The court acknowledged that “the custom is to put
ellipses in,” but did not press the issue. ECF No. 1792 at 182.
30
Time and again, using carefully edited clips, Chevron sought to portray
Donziger as corrupt—the head of a vast criminal conspiracy. In truth, however,
most of the statements were him venting about Chevron—its scorched-earth tactics,
massive war chest, and strategy of delay—or expressing frustration or fear that
what he said to American courts in the 1990s would come to pass: that Chevron
would corrupt the process.8
Chevron also sought to instill fear in anyone who might be sympathetic to
the plaintiffs’ cause. Shortly after an expert named Harry Dunkelberger agreed to
help the Ecuadorian plaintiffs estimate the environmental damage caused by
Chevron, “two men in dark suits” appeared at his door on a Friday evening while
he was about to go out to dinner with his family and pressured him to “turn[]” on
Donziger. A-646.2. Days later he received a call from a Gibson Dunn associate
who warned Dunkelberger that he would be better off “do[ing] it the easy way”
rather than the “alternative.” Id.
See, e.g., A-2579 (Donziger in personal diary: “We are winning on the proof,
but we are losing the larger war because of time.”); A-2586 (Donziger in personal
diary: “I am getting this creeping feeling that we are not going to make it. There
are just too many obstacles—the structure and weakness of the court, the obvious
friendly ties of the judge and his staff to the Texaco lawyers, our own
disorganization and lack of resources, a lack of fight among the affected
communities and indigenous tribes which is a reflection of weakness resulting from
the violence Texaco has inflicted on them for so many years.”).
8
31
Up until this point, Chevron had been “losing the PR battle, if not the whole
war.” Mary Cuddehe, A Spy in the Jungle, The Atlantic, Aug. 2, 2010, available at
http://bit.ly/1pUKToW. So Chevron “regrouped and hired Kroll [& Associates],”
id.—a firm known for its “corporate espionage” work—to start spying on the
afectados and their lawyers.9 Kroll offered to pay one freelance journalist tens of
thousands of dollars to “go undercover as a journalist-spy in the Ecuadorian
Amazon” for a few weeks. Id. “There was a reason they wanted me,” she said:
“With one Google search, anyone could see that I was, in fact, a journalist. If I
went to Lago Agrio as myself and pretended to write a story, no one would suspect
that the starry-eyed young American poking around was actually shilling for
Chevron.” Id. Although she found the offer enticing, she ultimately resisted
Chevron’s advances. Id.
Chevron also began spying on Donziger. Although the full extent and
duration of this activity is not publicly known, when Donziger hired a former FBI
agent to investigate whether he was under surveillance, the investigator confirmed
that “three vehicles followed [Donziger]” around New York, even getting out of
their cars when he did and then “walk[ing] towards” him. A-646. When Donziger
See, William Finnegan, The Secret Keeper, The New Yorker, Oct. 19, 2009,
available at http://nyr.kr/UZ94Hf (“With its international intelligence networks
and their sometimes unnerving abilities,” Kroll is often “described as ‘a private
C.I.A.’”).
9
32
returned home to his apartment, where he lives with his wife and young child, the
men “took up positions on the street.” Id.
Chevron has never denied that it has engaged in extensive surveillance of
Donziger and his family. Daniel Karson, Kroll’s Chairman and the case manager
for the Donziger project, acknowledged that Kroll had drafted “between 20 and 30
reports regarding Mr. Donziger” since the company was retained in August 2009.
CA-8.2; CA-8.4. Kroll operatives were also active in Ecuador; the record includes
several photographs of the plaintiffs’ lawyers captured by Kroll operatives in Quito.
ECF Nos. 754-02-05. All this surveillance came at an astronomical cost to
Chevron—the total figure, as of June 10, 2013, is available in the sealed volume of
the appendix but cannot be disclosed in this brief because Chevron has designated
it as confidential. CA-8.3.
H.
The Ecuadorian court enters a preliminary judgment
against Chevron (February 2011)
Meanwhile, the litigation in Ecuador was heading toward a conclusion. On
February 14, 2011—after eight years of litigating the case in Ecuador, a 215,000page court record, and scores of inspections and expert reports detailing the
extensive scope of Chevron’s malfeasance—the Corte Provincial entered a provisional
sentencia (or “preliminary judgment,” as this Court called it) against Chevron in a
comprehensive 188-page decision. A-1039; Naranjo, 667 F.3d at 242 n.1. Several
aspects of this decision are worth highlighting.
33
First, the court addressed Chevron’s concerns about expert objectivity by
granting its request and refusing to take into consideration either the Cabrera
Report or the submissions of the plaintiffs’ expert, Dr. Charles Calmbacher, in
issuing its verdict. A-1086-89. The court also gave reduced weight to an expert
report on health effects because its author disclosed that he had been hired by the
Amazon Defense Front, a nonprofit environmental organization assisting the
plaintiffs. Id.
Second, the court compensated for the experts’ perceived lack of objectivity by
relying repeatedly on test results by Chevron’s own experts—and on Chevron’s
own admissions—to support the conclusion that Chevron had contaminated the
environment. For example, although Chevron had argued that the “production
waters” it dumped into the environment posed no environmental risk, the
Ecuadorian court cited contrary sample results by Chevron’s own expert and a
statement by Chevron experts that even if production waters didn’t contain
significant concentrations of toxic compounds, they might “represent a potential
harm to receptive bodies and to vegetation.” A-1183.
Third, the court also addressed Chevron’s charges of misconduct by
Donziger, which Chevron tried to establish by presenting carefully edited outtakes
from Crude that it had obtained in the § 1782 proceeding against him. Judge
Nicolás Zambrano condemned both Donziger’s statements criticizing the
34
Ecuadorian judiciary—which Donziger made out of fear that the judiciary would
be corrupted by Chevron, not him—as well as Chevron’s attempts to trash
Donziger’s reputation by quoting the Crude outtakes out of context.10
Finally, the court calculated the actual damages at $8.646 billion. The court
rejected the plaintiff’s request for damages for excess cancer deaths and unjust
enrichment—the two highest-value categories that they advocated. A-1222-24.
The breakdown of the damages award was as follows: $5.396 billion for soil
remediation; $1.4 billion for health care costs; $800 million for deaths due to
cancer; $600 million for groundwater remediation; $200 million for damage to the
ecosystem; $150 million for drinking water remediation; and $100 million for
damages to indigenous culture. In re Chevron Corp., 650 F.3d at 280-81. The total
cleanup cost awarded by the court, assessed per cubic meter, is well within the
average for oil spills of this magnitude, including the 1978 Amoco Cadiz spill in
France, the 1989 Exxon Valdez spill in Alaska, the 1991 spills in Kuwait, and the
The court held: “[I]nsofar as concerns the merits of [Donziger’s]
statements, they are rejected—especially the unwarranted statements regarding the
Ecuadorian Judiciary—and the Court does not recognize anything that Mr.
Donziger might say or do when he is in front of the cameras or in any other act.
No pressure has effectively been exerted on this Court. In addition, the Court notes
that [even if it had] the power to judge Mr. Donziger due to his disrespectful
statements, it could not do so based on such limited portions, chosen and edited
from hours of taping, and without giving the accused the right to defend himself or
explain the context of those statements.” A-1089-90.
10
35
2002 Prestige spill in Spain. Republic of Ecuador Rejoinder, at 91-92, available at
http://bit.ly/1xjS3p5.
The court also assessed $8.646 billion in punitive damages (100% of the
remedial damages) in light of Chevron’s egregious procedural and substantive
misconduct and the need to dissuade Chevron and others from similar misconduct
in the future. A-1086-89. But the court gave Chevron the option to avoid punitive
damages by issuing a public apology—“a symbolic measure of moral redress”
recognized by the Inter-American Court of Human Rights. A-1224. Chevron did
not do so. Nor has it paid a dime of the judgment to the people it injured.
I.
The Ecuadorian court clarifies its judgment (March 2011)
On March 4, 2011, the Corte Provincial issued a 24-page order in response to a
laundry list of requests by Chevron for clarification of the judgment. Importantly,
the order confirmed the provisional judgment’s exclusion of the Cabrera Report,
explaining that “the report had NO bearing on the decision,” which is why the
court had “refused to void the entire case” against Chevron based on allegations
concerning the report’s preparation. A-1245.
J.
Chevron declines to challenge the preliminary judgment
under Ecuador’s Collusion Prosecution Act
At this point, Chevron had two ways in which it could seek relief from the
provisional judgment—each with its own, non-mutually-exclusive procedural path.
The first: Challenge the judgment’s legal and factual basis by asking a three-judge
36
panel to review the record de novo and issue a substitute judgment. The second:
Challenge the legitimacy of the proceeding by bringing a separate action to nullify
the provisional judgment as tainted by fraud—irrespective of whether it reached
the right result. Both options are available to losing parties under Ecuadorian law,
but they must be kept separate; one is not a substitute for the other.
Chevron chose not to avail itself of the second option—Ecuador’s exclusive
remedy for aggrieved parties who allege that a proceeding was collusive or
fraudulent. Indeed, the Collusion Prosecution Act expressly allows such parties to
make their collusion allegations in a separate action, and to submit whatever
evidence they have to support those allegations, even if it lies outside the original
proceeding’s record. SPA-631 (Collusion Prosecution Act, art. 6). If the grounds for
the claim are confirmed, the Act mandates that “measures to cancel the collusi[ve]
proceeding” will be issued, “cancelling the act or acts, … and [redressing] the
damage caused … and, in general, returning … things to the state they were before
the collusion.” Id.11
Even though Chevron has not yet pursued this remedy, it is still available.
Recognizing that evidence of fraud can take time to come to light, the Act has a
To ensure the effectiveness of this remedy, the Act also provides for two
levels of appellate review—the first entirely de novo. SPA-631 (CPA art. 8).
11
37
five-year limitations period. SPA-632 (CPA, art. 10). Chevron thus has until
February 14, 2016 to avail itself of this local remedy.
K.
An Ecuadorian three-judge court reviews the case de novo
and enters a substitute judgment against Chevron (2012)
Chevron did, however, avail itself of its other remedy—seeking direct, de
novo review of the trial court’s decision. The Ecuadorian plaintiffs did the same. In
March 2011, after the trial court issued its clarification order, a panel of three
judges from the same court was randomly selected to review the trial court record
and issue a substitute judgment of its own. A-1228.
The three-judge court issued its modified, substitute judgment in January
2012—nearly ten months after the first panel had been selected. A-452. The
court’s opinion addressed and rejected each of the Ecuadorian plaintiffs’ grounds
for appeal. Id. It also rejected Chevron’s contention that “fraud and corruption of
plaintiffs, counsel and representatives” should serve as a basis to reverse the
decision. A-462. The court explained that its obligation was to assess the evidence
“as a whole.” A-464. After “evaluating the evidence collectively,” the court found
that it amply supported the decision. Id.
The three-judge court later clarified its decision at Chevron’s request,
confirming that it had considered all of Chevron’s charges of “irregularities in the
preparation of the trial court judgment” and found them to be pure speculation,
belied by the trial-court record. A-491. The court declined to “make a
38
pronouncement on the interminable and reciprocal accusations over misconduct of
some of the parties’ attorneys, experts or contractors” because they “could not
affect the final result of the lawsuit.” A-492.
L.
The Ecuadorian Supreme Court grants “cassation” review,
affirms liability, and reduces damages (2013)
Chevron then filed a “cassation” petition with the Corte Nacional—Ecuador’s
highest non-constitutional court—seeking review of the substitute judgment, which
the Court granted. The Court issued an opinion in November 2013 largely
affirming the judgment. A-3449. The Court addressed Chevron’s complaints about
the Cabrera Report, explaining that “the trial court’s judgment did not take [the
report] into account,” and Chevron has “not indicate[d] which law [was] violated”
by the judgment, nor has it explained how its allegations, even if true, “affect[ed]
the validity of the proceeding” or “harm[ed]” Chevron in any way. A-3545-46.
More broadly, the Court explained that Chevron’s claim of a “great
collusive demonstration” in the trial court was irrelevant to its cassation appeal. A3543. For one thing, the Court stressed that “the court decision sought to be
annulled here is the one rendered by the [three-judge] court of appeals, and not the
one issued by a trial court, something which the cassation appellant has confused in
this allegation.” A-3548. For another, the Court explained that it lacked
jurisdiction to consider Chevron’s collusion claim anyway because “[w]hen
collusion is an independent action” it is “regulated under the Collusion Prosecution
39
Act”—the exclusive remedy provided by Ecuadorian law. A-3543. And so “it is not
possible,” the Court emphasized, “to seek the cassation of a judgment by making
these kinds of allegations.” Id. The Court thus affirmed the appellate court’s
conclusion that Chevron’s claims of “procedural fraud” and “collusion” were “not
within [the] scope of [its] jurisdiction.” Id.12
But the Corte Nacional did not affirm the substitute judgment in its entirety.
Quite the contrary, the Court struck the entire punitive damages award—thus
cutting the damages award nearly in half, by $8.646 billion—because the Court
found that “there is no legal justification” for it. A-3669. Cf. State Farm Mutual Auto.
Ins. Co. v. Campbell, 538 U.S. 408 (2003).
Chevron has now sought relief from the Corte Constitucional del Ecuador (or
Constitutional Tribunal of Ecuador), which granted its petition for review and will
consider Chevron’s due-process arguments.
II.
Chevron brings this action as yet another collateral, preemptive
attack on enforcement of the Ecuadorian judgment
A.
Chevron files this action
Rather than exhausting its remedies under Ecuadorian law, Chevron filed
this case in New York in early 2011—two weeks before the preliminary Ecuadorian
See also id. (“If, as [Chevron] alleges, there were irregularities in the
proceeding, Ecuadorian legislation establishes actions that can be brought for these
kinds of facts, … but allegations of this kind may not be made nor may cassation of
the relevant judgment be sought without any reasoned legal basis.”).
12
40
judgment was entered and nearly a year before the three-judge court issued its
substitute judgment. ECF No. 1. Chevron named more than 50 people as
defendants: Donziger, Pablo Fajardo (the afectados’ lead Ecuadorian lawyer), and
dozens of indigenous people who have never left the jungles of Ecuador.
Chevron’s complaint quotes Judge Kaplan, who “summarized” the case “a
few months” before it was filed: “[T]he name of the game is, arguably, to put a lot
of pressure on the courts to feed them a record in part false for the purpose of
getting a big judgment or threatening a big judgment, which conceivably might be
enforceable in the U.S. or in Britain or some other such place, in order to persuade
Chevron to come up with some money. Now, do the phrases Hobbs Act, extortion,
RICO, have any bearing here?” Id. at 118 (quoting Hearing Tr. 9/23/10, at 24:622).
The complaint alleges that they do. It originally asserted nine claims:
(1) substantive RICO violations under 18 U.S.C. § 1962(c), including
“extortion in violation of [the] Hobbs Act, 18 U.S.C. § 1951”;
(2) conspiracy to violate RICO under 18 U.S.C. § 1962(d);
(3) common-law fraud (under New York law);
(4) tortious interference with contract (under New York law);
(5) trespass to chattels (under New York law);
(6) unjust enrichment (under New York law);
(7) civil conspiracy (under New York law); and
(8) violations of New York Judiciary Law § 487.
41
ECF No. 1, at 119-144. The ninth claim, which was later severed from the rest,
was a request that the anticipated Ecuadorian judgment be deemed “unenforceable
and non-recognizable, including but not limited to under the United States
Constitution, federal common law, New York common law principles of comity,
and/or New York’s Recognition [Act],” on “grounds of fraud, failure to afford
procedures compatible with due process, lack of impartial tribunals, and
contravention of public policy.” Id. at 144. Under this claim, Chevron also sought
an injunction barring anyone “from commencing, prosecuting, or advancing in
any way—directly or indirectly—any attempt to recognize or enforce any Lago
Agrio judgment in any court, tribunal, or administrative agency in any jurisdiction,
in the United States or abroad.” Id. at 145.
When filing the complaint, Chevron noted on the cover sheet that the case
was “related to” the two § 1782 proceedings presided over by Judge Kaplan. Judge
Kaplan accepted the case, immediately issued an order to show cause why a
temporary restraining order shouldn’t be granted, and set a hearing for five days later.
ECF Nos. 3, 4.
B.
The district court grants a temporary restraining order
Just before the hearing—after Chevron had filed a 70-page preliminaryinjunction motion and nearly 7,000 pages of supporting affidavits and exhibits, see
ECF Nos. 4-58—Donziger hand-delivered a letter to the court informing it that he
42
had returned from a trip to Ecuador only the day before and had not been able to
retain counsel on such short notice. He asked the court to briefly continue the
hearing. But the court refused and said that it would grant Chevron a temporary
restraining order. The court explained its thinking: “[W]e are dealing here with a
company of considerable importance to our economy that employs thousands all
over the world, that supplies a group of commodities, gasoline, heating oil, other
fuels and lubricants on which every one of us depends every single day. I don’t
think there is anybody in this courtroom who wants to pull his car into a gas station
to fill up and finds that there isn’t any gas there because these folks have attached it
in Singapore or wherever else.” Hearing Tr. 2/8/2011, at 49:21-50:4.
The next day—eight days after Chevron filed its complaint and without an
evidentiary hearing—the court issued a temporary restraining order preventing the
defendants from taking any steps to enforce “any [Ecuadorian] judgment entered
against Chevron” anywhere in the world outside of Ecuador, where Chevron has
no assets. ECF No. 77. The court gave Donziger and the other defendants two
days to file oppositions to Chevron’s preliminary-injunction motion—even though
there was still no Ecuadorian judgment, let alone an enforceable one—and set a
hearing for a week later. Id. Donziger was unable to retain counsel until the day
before the hearing.
43
At the preliminary-injunction hearing, the court made clear that it wouldn’t
let Donziger submit any filings, even though his professional reputation and life’s
work were on the line. The court was emphatic: “[Donziger] had until the date I
gave him to file papers. He didn’t, it’s over … Over. Closed. … If for whatever
reason Mr. Donziger just elected or failed to submit papers, well, that’s what
happens.” Hearing Tr. 2/18/11, at 79:18-80:16. That is indeed what happened.
One week later, after Donziger’s new counsel worked around the clock to prepare
a brief on his behalf, the court refused to accept it, denying him any opportunity to
respond in writing to Chevron’s unprecedented motion. See ECF No. 137.
C.
The district court issues a worldwide injunction
In March 2011, still without having held an evidentiary hearing, the court
entered a preliminary injunction nullifying the Ecuadorian judgment and blocking
any attempt to enforce it outside of Ecuador. Chevron Corp. v. Donziger, 768 F. Supp.
2d 581 (S.D.N.Y. 2011).13
Based on what it called “abundant evidence,” the court found that “the
Ecuadorian judgment in this case ‘was rendered under a system which does not
Although the court gave Mr. Donziger no opportunity to be heard, its
opinion (a) referred to him by name 190 times, (b) used carefully edited Crude
outtakes—which the Ecuadorian court had criticized—to impugn his character, (c)
placed him at the center of an alleged conspiracy to subvert the Ecuadorian justice
system and deny justice to Chevron, and (d) faulted him for failing to explain his
statements “under oath” and to submit “sworn proof” to counter Chevron’s
evidence. Id. at 595, 606.
13
44
provide impartial tribunals or procedures compatible with the requirements of due
process of law.’” Id. at 633, 636. That “abundant evidence” consisted of three
things: (1) a report submitted by Vladimiro Álvarez Grau, an avowed political
opponent of President Correa, from which the court thought it was “reasonable to
infer” that the entire Ecuadorian judiciary was corrupt, id. at 634; (2) Donziger’s
own statements from the Crude outtakes expressing his fears that the Ecuadorian
judiciary was corrupt (the same position he advanced—and the court rejected—in
Aguinda), id. at 634-35; and (3) State Department and World Bank reports saying
the same thing they did in the 1990s, when Chevron was the Ecuadorian
judiciary’s staunchest defender. Id. at 535; A-387-408.
The court was transparent about its intentions: “This Court’s judgment
should finally determine the controversy worldwide” because a “decision by this
Court holding that the judgment is unenforceable and enjoining its enforcement
would bind all of the parties that potentially could enforce the judgment and
therefore should foreclose even the filing of foreign enforcement suits.” 768 F. Supp.
2d at 638, 647. “Moreover,” the court continued, “even if enforcement actions
were to be filed abroad in violation of an injunction, a decision by this Court with
respect to the enforceability of the Ecuadorian judgment likely would be
recognized as sufficiently persuasive authority—if not binding on the parties—to
dispose of the question of enforceability in the foreign fora.” Id. at 647.
45
D.
This Court, in Chevron v. Naranjo, promptly reverses the
injunction and orders dismissal of the severed ninth claim
In September 2011, this Court heard oral argument in the preliminaryinjunction appeal. During the argument, it became clear that no precedent
supported the district court’s sweeping injunction and that it raised profound
international-comity concerns regardless. See Oral Arg. Tr. 9/16/11, at 58:1160:12. Toward the end of the argument, a panel member expressed concern that,
even if the court were to reverse the district court’s order and vacate the injunction,
Chevron “would then go back to Judge Kaplan and ask to reactivate the RICO
claims and seek the same injunction under those claims.” Id. at 76:19-77:7.
Chevron’s counsel dodged the question and instead asked the Court to wait “just a
few weeks” so it could have a “full trial record.” Id. at 77:25-78:14.
This Court declined the invitation. The very next business day, it vacated
the injunction and stayed proceedings on the ninth claim—the only claim over
which it had jurisdiction—and announced that an opinion would follow. ECF No.
351; see also Chevron Corp. v. Naranjo, 2011 WL 4375022 (2d Cir. Sept. 19, 2011). In
vacating the injunction, the Court declined Chevron’s invitation to keep it “in
place in light of Chevron’s RICO and state-law claims,” which were “based on”
the same “underlying allegations.” Chevron Br. in Naranjo at 70-71.
In the opinion that followed, this Court explained that New York’s
“Recognition Act and the common-law principles it encapsulates are motivated by
46
an effort to provide for the enforcement of foreign judgments, not to prevent them.”
Naranjo, 667 F.3d at 241. They do not create “causes of action by which
disappointed litigants in foreign cases can ask a New York court to restrain efforts
to enforce those foreign judgments against them, or to preempt the courts of other
countries from making their own decisions about the enforceability of such
judgments.” Id. at 243. The Court also emphasized the “far graver” affront to
international comity that would result from a contrary interpretation. Id. at 244.
The Court reversed the judgment, vacated the “radical” injunction, and
remanded the case to the district court with instructions to dismiss Chevron’s ninth
claim—the only claim before the Court—“in its entirety.” Id. at 244, 247.
E.
Chevron immediately attempts to evade Naranjo
About a month after this Court’s decision, Chevron again asked the district
court for a preemptive ruling that the substitute Ecuadorian judgment, which had
just been issued, was not entitled to recognition—this time in its RICO case. See
ECF Nos. 396 & 397. Chevron’s new theory was that the defendants had put the
judgment at issue by raising the affirmative defense of collateral estoppel in their
answers. So Chevron moved for summary judgment, hoping that the court would
reject the defense on the ground that the judgment wasn’t entitled to recognition
under New York law. See id. The defendants responded by making clear that they
“are not asserting in this lawsuit the affirmative defenses of res judicata and/or
47
collateral estoppel.” ECF No. 450, at 2. And “lest there be any doubt,” the
defendants “affirmed that they will never assert in this case the defense of res
judicata or collateral estoppel with respect to the Ecuadorian Judgment”—a
position they have taken ever since. Id. at 3.
F.
The district court refuses to allow the defendants to drop
their collateral-estoppel defenses
The court rejected the defendants’ express disavowals and kept the
collateral-estoppel defense in the case—putting the Ecuadorian judgment’s
enforceability once again at issue. ECF No. 550, at 67-71; see also Hearing Tr.
10/18/12, at 11:1-3 (“I am not going to allow you to amend to delete the res
judicata or collateral estoppel defense, period. That’s not going to happen.”). Only
later, in denying a recusal motion, did the court acknowledge that, just as the
plaintiff is the master of the complaint, the defendants “of course” have “the option”
of selecting their own defenses. ECF No. 1407, at 15 n.50. Chevron’s counsel said
the same to this Court: The defendants, he represented, “still have the right to
[assert the defense] or not. … If they didn’t press it [at trial], it won’t be in the case.
It will not be in the case.” Oral Arg. Tr. 9/26/13, at 19:16-21.
G.
The court allows Chevron to drop its “sham litigation”
claim
As the case proceeded, the defendants requested all of Chevron’s documents
concerning the scientific evidence of its pollution in Ecuador. They argued that this
48
evidence was needed to disprove the complaint’s repeated allegations that the
Ecuadorian case was “sham litigation” that was “objectively baseless.” See ECF No.
705-1. Chevron took steps to ensure that this wouldn’t happen by dropping the
allegations and renouncing any attempt to prove that the litigation was baseless:
Chevron does not intend here to relitigate the environmental
conditions existing in the Oriente or the relative, substantive merit of
scientists’ expert opinions on that subject. In that regard the discrete
inquiry here will be whether the judgment’s findings have any support
untainted by fraud in the record that existed before the Ecuadorian
court at the time the judgment was issued.
ECF No. 705, at 3-4. The district court granted the request, saying that it would let
Chevron “clarif[y] its position with respect to the ‘sham’ allegations.” ECF No. 720.
But even though the “discrete inquiry” was now “whether the judgment’s findings
have any support untainted by fraud in the [Ecuadorian] record,” id., the court
refused to allow the defendants to submit evidence from the Ecuadorian record of
Chevron’s contamination in Ecuador, calling their attempts to do so “a joke.” Tr.
501-02.
Shortly thereafter, the court again denied a request by the defendants to
allow them to withdraw their collateral-estoppel defense. ECF No. 826. The
defendants had argued that “the Court in substance amended plaintiff’s complaint”
by letting Chevron drop its “sham litigation” allegations, and that they should be
treated similarly, but the court disagreed. Id. at 2-3.
49
H.
Chevron forces Donziger to proceed pro se and drops its
damages claim on the eve of trial to avoid a jury
In May 2013, shortly after its CEO declared that the case would not end
until the other side’s lawyers gave up, Chevron forced Donziger’s lawyer to do just
that. ECF No. 1100. In his withdrawal motion, John Keker explained why:
“Through scorched-earth litigation, executed by its army of hundreds of lawyers,
Chevron is using its limitless resources to crush defendants and win this case
through might rather than merit.” Id. at 1-2. Donziger and his lawyers couldn’t
keep up with Chevron’s “endless drumbeat of motions” and depositions “from Park
Avenue to Peru.” Id. The case, Keker lamented, had “degenerated into a
Dickensian farce.” Id. at 1. Donziger represented himself for the next five months.
One month before trial—faced with the prospect of having a jury evaluate
its evidence—Chevron dropped its request for billions of dollars in damages against
the Ecuadorian defendants. ECF No. 1404. It did so because the U.S. Constitution
guarantees every defendant in a federal case the right to a jury only so long as “the
amount in controversy shall exceed twenty dollars.” U.S. Const. amend. VII.
Three weeks later—on the last possible day—Chevron did the same with respect to
Donziger, but only “upon a finding from [the] Court under Fed. R. Civ. P. 39(a)(2)
that all issues in this case will be tried by the Court.” ECF No. 1469. The court
made the finding and denied the request for a jury trial. ECF No. 1500.
50
III.
After a seven-week bench trial, the district court again issues a
decision preemptively nullifying the Ecuadorian judgment
A.
The court holds a seven-week bench trial
When the trial started in October 2013, the resource disparity between the
two sides could not have been starker, or more visual: On one side, a phalanx of
Chevron’s lawyers filled the booths, lined the walls, and occupied a large overflow
room that had been annexed and converted into a Gibson Dunn war room.
Chevron’s General Counsel attended nearly every day for the full seven weeks. On
the other side were Donziger, his new counsel (two lawyers who had entered their
appearances only the week before), and a handful of youthful volunteers, some on
leave from their day jobs with environmental groups, as well as counsel for the
Ecuadorians (a solo practitioner who had never handled a jury trial). ECF No.
1507. When the defendants wanted to confer as a group, they met in a room the
size of a closet. Tr. 838:3-11.
Chevron’s case at trial rested on four primary allegations—two new and two
old. The new allegations, although new, provoked a sense of déjà vu: Chevron
claimed that the defendants bribed the first-level Ecuadorian judge and ghostwrote
the judgment he issued. But this time, instead of relying on Diego Borja, Chevron
relied on Alberto Guerra—a man who confessed to bribing judges as an attorney
and accepting bribes as a judge. Tr. 1216:20-1218:8. The old allegations were that
the defendants corrupted the entire case by working with Cabrera and that
51
Ecuador’s judicial system is so systemically inadequate that any judgment
emanating from it is unworthy of respect.
Of these four allegations, the first three do not in any way implicate the
substitute Ecuadorian judgment. The fourth—systemic inadequacy—does not in
any way implicate the defendants. Chevron’s sole reason for including it in the case
is to show, as its post-trial brief argues, that the “judgment is not subject to
recognition” under New York’s Recognition Act. ECF No. 1847, at 274-80.
1.
Chevron’s allegations of impropriety regarding the
judgment
a. Chevron’s second alleged “bribery” scheme. Chevron’s star
witness at trial was Guerra, a former Ecuadorian judge who contacted Chevron in
2012 with “a story to tell” about “the drafting of the judgment at the trial court
level.” A-2916.14 At that time, Guerra was making $500 per month in Ecuador and
had no savings, and his son was facing “serious [immigration] problems” in the
United States. A-2902-03; CA-102. Chevron arranged for Kroll representatives to
This was not the first time Guerra made an overture to Chevron. In
October 2009, he reached out to Chevron’s lawyers offering to “‘fix’ the entire case”
in Chevron’s favor. A-1864-65. One or two months later, he made the same offer
to Chevron in person. A-1865; see A-2600-01. Guerra later claimed that he and
Judge Zambrano struck a deal with the plaintiffs and Donziger at a Quito
restaurant shortly thereafter—in mid-to-late November or December 2009—even
though Donziger’s immigration records show that he was outside the country at
that time because his mother was dying from cancer. Tr. 919-922; A-1356; A-1291.
The district court declined to credit this part of Guerra’s testimony, finding that it
conflicted with a previous account he had given. SPA-251.
14
52
meet Guerra in a Quito hotel room, where he told them that he had helped
ghostwrite the judgment in exchange for $300,000 from the Ecuadorian plaintiffs’
lawyers. CA-96, 115, 134, 170, 173. He said this story was “worth a million dollars.”
CA-118.
When Chevron’s representatives met Guerra a few weeks later, they brought
a bag filled with $20,000 in cash. A-2769. Although this amount was 40 times his
monthly income, Guerra was unimpressed, calling it “very little” and asking:
“Couldn’t you add a few zeros?” Id.; A-2778. “[M]oney talks,” he said, but “gold
screams.” A-2778. (When asked at trial whether he said these words, he answered:
“I don’t recognize that adage that you are quoting. It’s not something that’s typical
in my country. But in one way or another I did express that feeling.” A-800.) A few
minutes later, a Kroll investigator explained that Chevron wanted photocopies of
Guerra’s day planners and access to his email accounts, prompting this exchange:
GUERRA: “[A]ctually, actually … I have some attachment to that,
right? All the information I have there.
ANDRÉS RIVERO: That can be fixed.
INVESTIGATOR 5: You will become more attached to what you
can buy with the money we pay you. [LAUGHS]
RIVERO: Yes, sure, true, true.
GUERRA: It helps, but, but it’s so little.
*
*
53
*
INVESTIGATOR 5: “[W]e’ll make a deal on the way to your house.
This is what we have in cash. Between now and afternoon’s end we’ll
have managed to have a little more. How much is it?
RIVERO: How much? Not when. I said how much. [LAUGHS]
GUERRA: Make it fifty thousand.
A-2784.
Chevron ended up paying Guerra much more than fifty thousand. As it did
with Borja, Chevron has paid Guerra hundreds of thousands of dollars in cash and
over a million in benefits, much of which continues to this day, including:
 $18,000 and a new laptop in exchange for his hard drive, USB drives, day
planners, and access to his email accounts;
 $20,000 and a new cell phone in exchange for his phone records, bank
records, old cell phone, and access to his bank account;
 $10,000 for handing over an 8-page Word document and several bank
deposit slips;
 an ongoing monthly stipend of $10,000, even though he has performed no
work for Chevron besides getting ready for trial;
 an ongoing monthly housing allowance of $2,000;
 a personal lawyer whose bills Chevron pays;
 all moving expenses—including airfare and a temporary hotel—for him, his
wife, his son, and his son’s family;
 $12,000 to purchase household items for his new life in the U.S.;
 a car with insurance;
 health insurance covering him, his wife, and his son’s family; and
54
 payment of all legal fees to finalize the immigration of his entire family.
A-770-82; A-801-04; A-1370.
Once Chevron started paying him, Guerra began changing his story. He
admitted that the Ecuadorian plaintiffs’ lawyers did not in fact promise him
$300,000 to write the judgment, calling this “an exaggeration [on his] part towards
Chevron’s people in order to secure a better position for [himself].” A-816. By
“exaggeration,” he meant: “It was not true.” Id.; A-3002; A-3007.
Guerra also changed his story of how he wrote the judgment. He previously
claimed to have worked on it at his home in Quito after Judge Zambrano gave him
a flash drive containing a draft. A-790-91. But when no corroborating evidence
was found, Guerra claimed that he actually wrote the judgment in Lago Agrio, on
Fajardo’s laptop. A-2941. His explanation for the change was that his “memory
improved regarding those facts.” A-809.
Guerra’s story shifted in another important respect. When he first met with
Chevron’s investigators, he told them that Fajardo had emailed him a short
background document to use while drafting the judgment (the so-called “memory
aid”). CA-180. When asked whether he could provide proof of the email, Guerra
replied: “Uhmm. That, damn, well, technically it can be obtained, right?” Id. A
couple weeks later, after a Chevron investigator again asked him for the email,
Guerra said that he “[didn’t] know anything about that.” A-2767. The investigator
55
explained that Chevron could access Guerra’s account and find the email for him,
to which Guerra responded: “Well, you know that I, in that one … precisely a few
days ago I had problems with my email.” A-2767-68 (ellipsis in original). Later,
when the email didn’t turn up—and Fajardo’s email address didn’t even appear in
Guerra’s list of contacts—Guerra said that he “recalled that [Fajardo] personally
handed [him] the document in the nighttime hours of the first of day of [his]
review.” A-1343; Tr. 1012:9-12. Guerra explained that he hadn’t been able to
locate the document before because “[i]t was stuck to some other ones that [he]
had in [his] possession.” A-773. He never provided a draft of the judgment he
supposedly worked on, nor could Chevron’s investigators ever find one. A-803-04.
Guerra did not deny that he kept changing his story. As with his admittedly
made-up $300,000 bribery allegation, he claimed that his shifting narrative served
a purpose—to net him more money from Chevron. He was transparent about this:
“I said many things to the gentlemen, to their representatives from Chevron. On
many of those I was exaggerating. I wanted to improve my position regarding these
gentlemen.” A-807-08. And: “I did tell them some exaggerated things because it
was my intention or for the purpose of bettering or improving my position.” A-813.
And again: “I told Chevron several things. Some of them were true, others were
exaggerations.” A-3020.
56
Although the district court was cagey about the extent to which it relied on
Guerra’s testimony, the court determined that “Guerra was an impressive witness”
and credited his story that he was bribed to ghostwrite the provisional Ecuadorian
judgment. SPA-262, 277, 291-93. The court was not troubled by the money he
received to testify, dismissing it as “a private witness protection program created for
him by Chevron.” SPA-234.
b. Chevron’s ghostwriting allegation. Closely related to its bribery
allegation is Chevron’s claim that the plaintiffs’ legal team—Donziger, Fajardo,
and others—secretly ghostwrote the preliminary Ecuadorian judgment under an
agreement they struck with Guerra in late 2010. A-1361. Like the bribery
allegation, this allegation does not in any way implicate the three-judge court’s
substitute judgment. Even so, Chevron was unable to provide any direct evidence
to support its ghostwriting theory. Despite having access to the entire “universe” of
computer files and internal communications, Chevron could not produce a single
draft of any allegedly ghostwritten judgment or find any correspondence among
the plaintiffs’ lawyers mentioning one. Nor could Chevron identify any emails
showing that the plaintiffs had a relationship with Judge Zambrano or knew of his
intentions.
The emails Chevron identified actually show the opposite. On December 31,
2010—shortly after the alleged deal with Guerra was struck and six weeks before
57
the judgment was issued—Fajardo emailed Donziger expressing concern that the
plaintiffs had not yet submitted their alegato (or final post-trial brief) to the court:
Nobody knows when the Judge may issue the judgment; he may do it
in two weeks, several months, or even years. If he does it in several
months, he may possibly consider the memoranda of law, but if the
judge issues the judgment soon, we will end up with the document in
hand and it will be useless to us. We are not going to run that risk.
A-1900. He concluded: “I’m sorry my friends, but we are behind schedule with this
memorandum of law, which could have serious consequences for the case.” Id.
When Chevron filed its own alegato one week later, Fajardo grew even more
worried that the plaintiffs might lose the case. He emailed the team on January 8:
As you can see, my concerns are well founded. Chevron has gotten
ahead of us by filing their alegato, while we are still writing ours. All the
more reason to speed up our work, otherwise the Judge could be
convinced by Chevron’s theory.
A-1905. After another team member expressed his surprise that Chevron had filed
so quickly, Fajardo responded: “The one who strikes first has greater success or
causes greater impact…They want to influence the judge with their theory. It is a
mistake on our part to have fallen asleep for so long on the alegato.” A-1904 (ellipsis
in original).15 Chevron did not explain why Fajardo would have been so concerned
if he had already arranged for a favorable judgment.
The district court determined that these emails are “classic hearsay” and
thus inadmissible evidence. SPA-286. But the emails were not offered to prove the
truth of the matter asserted—that the plaintiffs were actually late in filing their
(continued…)
15
58
Nor did Chevron explain why the judgment would have denied many of the
plaintiffs’ damages requests if the plaintiffs had actually written it, as illustrated
below:
Type of
Remediation
Groundwater
Potable Water System
Ecosystem Restoration
Damages Requested By
Plaintiffs
$394 to $910 million
(Cabrera: $3.24 billion)
$536 to $541 million
$874 million to $1.697 billion
Damages Awarded By
Court
$600 million
$150 million
$200 million
A-1217; A-1220-22; A-3139.186-87; A-3139.191-93.
Instead, Chevron based its ghostwriting theory on similarities between
language in the preliminary judgment and in some of the plaintiffs’ work product
that was supposedly never filed. See, e.g., PX 3800. Chevron’s experts reached this
conclusion without having reviewed by hand approximately 100,000 pages in the
record—which is unavailable electronically—and without accounting for how
Chevron had filed motions and other documents that are not part of the official
record (either because they were never formally logged or because they were not
properly maintained). See ECF No. 918-52.
alegato, or that their delay would actually have serious affects for the case. They
were offered instead to show the lawyers’ state of mind at the time: that they were
worried the judge would rule against them. The emails thus fall under a wellrecognized hearsay exception—despite the district court’s conclusory assertion to
the contrary. See Headley v. Tilghman, 53 F.3d 472 (2d Cir. 1995).
59
Based on this theory, Chevron subjected Judge Zambrano to a lengthy crossexamination during trial, forcing him to endure a pop quiz—through translation—
about a 188-page decision he wrote nearly three years before. Here are some
examples of what Chevron’s counsel asked Judge Zambrano:
1. MR. MASTRO: “[S]ir, please tell us what the judgment says on page 107 is
‘the most powerful carcinogenic agent considered in this decision.’ Please tell
us what that was.” A-820-21.
2. MR. MASTRO: “Sir, can you tell us what theory of causation the judgment
says its author agrees with on page 88 of the judgment? Do not look at the
judgment, sir. Do not look at the judgment, please.” A-826.
3. MR. MASTRO: [C]an you tell me, Mr. Zambrano, what report the
judgment says at page 134 is the “statistical data of highest importance to
delivering this ruling,” yes or no? Yes or no?
MR. MASTRO: He’s leafing through the document, your Honor.
THE COURT: Mr. Zambrano, stop. Put the document down and answer
the question. A-823.
Judge Zambrano did not know the exact answer to every question. Unlike
Guerra—who had met with Chevron’s lawyers at Gibson Dunn approximately 50
times before taking the stand, A-767-68—Judge Zambrano had not been prepared
for his testimony, nor was he paid to give it. Tr. 1807:25. When Guerra told him
that Chevron would offer Judge Zambrano over $1 million in exchange for his
testimony, he declined. Tr. 1915:1-2.
The district court determined that the judgment was ghostwritten. SPA-252.
The court did not believe that Judge Zambrano could have written the decision
himself and refused to consider the possibility that other judges who presided over
60
the case (like Judge Núñez) could have contributed to its preparation along the way
but that Judge Zambrano, in an attempt to salvage some pride and dignity, had
nonetheless claimed sole credit. Judge Kaplan reasoned that no judge could have
reviewed the record in the case and written a 188-page decision only two months
after trial—a conclusion he made in a 586-page decision issued three months after
trial in this case, which has its own 100,000-plus-page record. SPA-203-04.
2.
Chevron’s allegations of fraud regarding the Cabrera
Report
Chevron’s next allegation focused on the way in which the report by a
damages expert, Richard Cabrera, was prepared. As it did before this Court in
Naranjo, Chevron claimed that the Ecuadorian plaintiffs’ lawyers had irreparably
corrupted the Ecuadorian proceeding by working with Cabrera—an argument
Chevron also made, unsuccessfully, to all three levels of Ecuador’s judiciary.
Despite Chevron’s allegations, the interactions between Cabrera and the
plaintiffs’ lawyers were fully consistent with Ecuadorian law and practice at the
time, which permitted parties to communicate ex parte with court-appointed experts
(as Chevron itself did). A-427–31; A-441–43; A-2075–76. It also permitted parties
to create work plans and to draft materials for the experts to adopt as their own (as
Chevron did too). Id. And it permitted—indeed, required—that the party who
requested the expert pay for the fees and expenses. Although Chevron contended
that the Ecuadorian plaintiffs’ lawyers paid Cabrera additional money to influence
61
his conclusions, this money covered only expenses for work he had actually
performed or was set to perform. The plaintiffs’ lawyers advanced the money
(which they were obligated by law to pay) so that his work would not be delayed.
One contemporaneous internal email, for example, explained that the Ecuadorian
trial court had been “taking [its] time in resolving [Chevron’s] recusal” motion,
which prevented the court from acting on Cabrera’s request that “we pay him for
financing the costs of the field work.” A-1288.1. “[I]f there’s no money,” the email
continues, “the job simply becomes paralyzed,” and “the expert’s job can’t wait”
until “the judge orders us to pay” his “expenses.” Id. The money for Cabrera’s
expenses was therefore paid out of a segregated account (an account kept secret
from the employees of the law firm, which was having difficulty making payroll as
litigation expenses mounted) in anticipation of court approval. A-3435-36.
None of the three Ecuadorian courts found anything improper about this
arrangement, but nonetheless set aside the Cabrera Report because it was
unnecessary to their decisions. The first-level court granted Chevron’s request that
the report “not be taken into account” (rather than waste time addressing
Chevron’s “excessively voluminous” filings regarding it) and later clarified that “the
report had NO bearing on the decision.” A-1089; A-1245. The second-level court,
reviewing the evidence de novo, similarly declined to rely on the report and found
that Chevron’s allegations “could not affect the final result of the lawsuit” given the
62
overwhelming evidence of Chevron’s liability. A-492. And the Supreme Court
confirmed that the judgment “did not take [the report] into account.” A-3545-46.
It noted that Chevron had “not indicate[d] which law [was] violated,” nor had it
explained how the allegations, even if true, “affect[ed] the validity of the
proceeding” or “harm[ed]” Chevron in any way. Id.
That conclusion is not surprising. Throughout the Ecuadorian litigation,
Chevron took the position that it owed nothing to the victims of its pollution and
refused to work with Cabrera as he prepared his report on damages. Instead of
providing an alternative damages calculation, Chevron tried to obstruct the
process: It “filed a considerable number of motions” attacking Cabrera and took
out full-page ads in several prominent publications assailing his “complete lack of
integrity”—an attempt to force his withdrawal through public humiliation. A-1088;
ECF Nos. 154-2, 154-3, 154-4.
Nonetheless, the district court again sided with Chevron. Citing the current
version of an Ecuadorian statute governing the payment of experts in criminal
proceedings, the district court concluded that the payments to Cabrera “were
illegal or at least improper” as a matter of Ecuadorian law, SPA-105-06—even
though Ecuador’s highest court found that Chevron could “not indicate which law
[was] violated.” A2545-46. And the district court determined that the judgment
had actually relied on the Cabrera Report—despite the Ecuadorian courts’ express
63
statements to the contrary—because the judgment used a “pit count” of 880 to
calculate damages. SPA-546. That number, however, was based on a review of
“aerial photographs,” plus documents “submitted by the parties” and “the expert
Gerardo Barros.” A-1163. The Ecuadorian court explained that it wasn’t based on
the Cabrera Report, where “[t]he number 880 does not appear.” Tr. 1337:1-5.
The Ecuadorian Supreme Court, addressing this very issue, independently held
that “the judge did not weigh the challenged report” or “contradict[] any principles
of logical evaluation” in calculating the total number of pits. A-3607. And Chevron
did not give the Ecuadorian trial court its own pit count—of its own pits—nor did it
do so below. See A-1163. In other words, Chevron did not contest that there were
at least 880 pits.
3.
Chevron’s allegation that the Ecuadorian judiciary is
corrupt
Aware that none of its case-specific allegations could carry the day—
particularly with respect to the substitute judgment—Chevron proceeded to attack
the Ecuadorian judiciary as a whole. The basis for this attack was the same as
before: State Department reports, Donziger’s own unguarded statements, and the
testimony of a single person—Dr. Vladimiro Álvarez Grau, a man this Court has
described as “an avowed political opponent of the country’s current President,
Rafael Correa.” Naranjo, 667 F.3d at 238.
64
Dr. Álvarez, a former presidential candidate and current newspaper
columnist, is the kind of figure who would be a regular on Fox News or MSNBC in
the United States. Admitting at trial that he did not “know anything at all
regarding the Lago Agrio case other than what is made public,” Tr. 2041:1-2, Dr.
Álvarez instead denounced Ecuador’s judiciary with broad, politically barbed
statements about judicial independence and the rule of law. For the proposition
that Ecuador’s judicial reforms in the mid-2000s violated the separation of powers,
Dr. Álvarez cited his own comments in Ecuador’s media. A-1418. Dr. Álvarez then
argued that the administration of justice in the Lago Agrio case could not have
been impartial because Correa made public statements in support of the LAPs. A1473. Nonetheless, for this sweeping criticism of Ecuador’s judiciary Chevron paid
Dr. Álvarez at least $150,000. A-829. The district court bought wholesale these
statements by a foreign political figure, citing Dr. Álvarez’s testimony 52 times in
nine pages and corroborating his claims only once. SPA-420-28.
B.
The court issues its decision
The district court issued a 586-page decision, including appendices, ruling
for Chevron across the board and finding that the Ecuadorian judgment “was
obtained by corrupt means.” SPA-497.
The court concluded that Chevron had Article III standing. Of the nine
injuries that Chevron alleged, the district court found that three were sufficiently
65
redressable to generate standing: the loss of Ecuadorian trademarks held by a
Chevron subsidiary; the loss of an arbitral award against the Republic of Ecuador;
and the present and future costs associated with defending against the enforcement
of the Ecuadorian judgment around the world. SPA 325-27.
The court also reasoned that the Ecuadorian appellate court’s de novo
review of the facts and the substitute judgment it issued did not break the chain of
causation required for standing. It found as a matter of fact that the appellate court
did not engage in de novo review because the judges had too little time to review
the record. SPA-428. The court further reasoned that, in any event, “the
subsequent appellate rulings are not entitled to any recognition in consequence of
the systemic deficiencies of the Ecuadorian legal system.” SPA-326.
Turning to the defendants’ claim that Chevron was estopped from making a
wholesale attack on Ecuador’s judiciary in light of its promise to submit to
Ecuadorian jurisdiction, the court concluded that when this Court found in Republic
of Ecuador that Chevron had merged with Texaco, it was “misinformed.” SPA-469.
The district court therefore held that “Chevron is not bound by any of the
statements made in Aguinda by Texaco,” including the promise to submit to
Ecuadorian jurisdiction. Id.
The court then issued its relief, including (1) a constructive trust on all
property that the defendants receive that is “traceable to the [Ecuadorian]
66
Judgment or the enforcement of the Judgment anywhere in the world”; and (2) an
injunction against “[f]iling or prosecuting any action for recognition or
enforcement of the Judgment or any New Judgment … in any court in the United
States.” SPA-590. The court defined “New Judgment” as “any judgment or order
that hereafter may be rendered in the Lago Agrio Case [by] any court in Ecuador.”
SPA-592. The district court determined that this relief was consistent with this
Court’s decision in Naranjo because Naranjo was “limited to the panel’s
interpretation of New York’s Recognition Act.” SPA-493.
In addition to Chevron’s RICO claim, the court grounded the relief in what
it called Chevron’s “non-statutory claims for equitable relief with respect to the
judgment.” SPA-330. It did not identify which, if any, of the claims in Chevron’s
complaint constituted this category.
Following the court’s decision, Chevron moved for $32 million in attorneys’
fees from Donziger, arguing that the fees are mandatory under RICO. ECF Nos.
1889-90. The district court deferred consideration of fees pending appeal.
STANDARD OF REVIEW
A district court’s determination of its own subject-matter jurisdiction is
reviewed de novo. Bechtel v. Competitive Techs., Inc., 448 F.3d 469, 471 (2d Cir. 2006).
Whether a claim states a cause of action is also reviewed de novo. See, e.g., Spool v.
World Child Int’l Adoption Agency, 520 F.3d 178, 183 (2d Cir. 2008). Finally, whether
67
to apply judicial estoppel is a “pure question of law,” Uzdavines v. Weeks Marine, Inc.,
418 F.3d 138, 143 (2d Cir. 2005), and should therefore be reviewed de novo as
well. Intellivision v. Microsoft Corp., 484 F. App’x 616 (2d Cir. 2012) (declining to
decide the standard of review for judicial estoppel but applying de novo review).
SUMMARY OF ARGUMENT
I. Because Chevron lacks standing, the district court lacked jurisdiction.
There is no causal link between the conduct of which Chevron complains and the
injuries Chevron alleges. The decision Chevron attacks is the substitute judgment
of the appellate court. But Chevron alleges misconduct only at the trial level. And it
has not even sought to contest its environmental liability.
Chevron’s standing problems do not end there. When it comes to relief,
Chevron is stuck between Article III and Naranjo. If Chevron’s injunction satisfies
Naranjo, it is too narrow and speculative to redress Chevron’s injuries; if it prevents
collection of the judgment worldwide, it is no more valid than the injunction this
Court struck down in Naranjo.
II. This Court has already held that “[t]here is no legal basis for the
injunction that Chevron seeks.” Naranjo, 667 F.3d at 242. Neither RICO nor the
district court’s “non-statutory claims for equitable relief” provide a valid basis for
circumventing Naranjo. Doing so would violate bedrock principles of international
comity and transform the Second Circuit into a magnet for collateral attacks by
68
disappointed litigants around the world.
III. Even if Chevron were to make it past standing and Naranjo, it would be
judicially estopped both by its prior representations regarding the adequacy of
Ecuador’s judiciary and by its promise to this Court that it would submit to
Ecuador’s jurisdiction as a condition of its forum non conveniens dismissal. Despite the
district court’s attempts to rewrite history, that promise is “enforceable against
Chevron.” Republic of Ecuador, 638 F.3d at 389 n.4.
IV. Finally, Chevron has no cause of action under RICO. RICO’s causation
and injury requirements are more stringent than Article III’s, and the relief
awarded by the district court awarded pushes RICO’s already strained language
far beyond the breaking point.
ARGUMENT
I.
Because Chevron lacks standing, the district court lacked
jurisdiction to issue its opinion and judgment.
When it filed this RICO action in 2011, Chevron made grand promises. It
promised to show that a two-decade quest by indigenous Ecuadorians to seek
justice for Chevron’s pollution of their rainforest homeland was nothing but “sham
litigation.” ECF No. 1 at 2. But along the way, Chevron dropped any attempt to
contest the overwhelming evidence that it willfully polluted the water, land, and air
of the Amazon for decades. Then, on the eve of trial, Chevron dropped all of its
damages claims—a transparent maneuver designed to deprive Donziger of his
69
constitutional right to a trial by jury. And, finally, in its post-trial briefing, Chevron
ditched its request for an injunction against all foreign enforcement proceedings—
an apparent attempt to avoid the serious international-comity concerns that led this
Court in Naranjo to reverse the district court’s previous worldwide anti-enforcement
injunction.
These three strategic decisions, taken together, leave Chevron on the horns
of an intractable legal dilemma. On the one hand, nobody may bring a case in
federal court without demonstrating the requirements of Article III standing: (1) a
legally cognizable injury that is (2) “fairly traceable to the defendant’s allegedly
unlawful conduct” and (3) “likely to be redressed by the requested relief.”
DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 (2006). As the plaintiff, Chevron
must show that it satisfies these three elements—injury, causation, and
redressability—for each claim and form of relief it seeks. Id. at 352. Until it has
done so, there is no jurisdiction over the case and the court has “no business
deciding it.” Id. at 341. Because there has been no attempt to enforce the
Ecuadorian judgment in the U.S., Chevron and the district court had to attempt to
demonstrate standing by giving the injunction real teeth—by proving that it binds
foreign courts in a way that makes it likely to redress Chevron’s claimed injury.
On the other hand, Chevron and the district court had to try to satisfy the
international-comity principles identified in Naranjo. That means they had to
70
appear to strip the injunction of any binding effect—by showing that it preserves
the ability of foreign courts to make their own decisions about how to apply their
own laws on enforceability. The dilemma facing Chevron and the district court is
that they had to somehow do both—a logical impossibility.
In addition to the dilemma it faces with its relief, Chevron faces a severe
causation problem. Its claimed injuries stem from the three-judge court’s substitute
judgment, which in Ecuador’s civil-law system is effectively the product of a retrial.
And yet the wrongdoing Chevron alleges all occurred at the trial level. To be clear,
Mr. Donziger vigorously contests every one of these allegations: The accusation
that he bribed a judge itself hinges on the paid testimony of a man who confesses to
bribing and being bribed, Tr. 1216:20-1218:8, and Ecuador’s own Supreme Court
pointed out that Chevron has “not indicate[d] which law [was] violated” in the
preparation of the Cabrera Report. A3545-46.
But even setting that aside, Chevron’s position is akin to that of a criminal
defendant who complains of procedural irregularities in a trial, is retried and
convicted once again, but continues to complain about the first trial in his habeas
petition. In that situation, no sensible reviewing court would reach out to overturn
the second trial. Cf. Fed. R. Civ. P. 61 (“[T]he court must disregard all errors and
defects that do not affect any party’s substantial rights.”). The intermediate
71
appellate court’s “de novo review and entry of its own valid final judgment cured
any error.” Executive Benefits Ins. Agency v. Arkison, 134 S. Ct. 2165, 2175 (2014).
This lack of causation also means that Chevron’s injuries will not be
redressed by the relief it sought and obtained. None of Chevron’s alleged injuries
will be remedied by the district court’s prospective injunction, and its future harms
are speculative and incapable of being prevented by an injunction that falls short of
the worldwide injunction rejected in Naranjo. Chevron should not be allowed to
obtain a U.S. court’s “advisory opinion” to be deployed for its persuasive value in
enforcement proceedings around the world. Naranjo, 667 F.3d at 246.
A.
Chevron cannot show that the alleged trial-level misconduct
caused the substitute judgment of the three-judge appellate
court.
Chevron lacks standing because it cannot, as a matter of logic, prove “a
causal connection between [its] injury and the conduct complained of.” Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560 (1992). Chevron’s case boils down to two
things: that an expert report submitted at trial was allegedly prepared improperly
and that the trial judge who issued the preliminary judgment was allegedly
influenced inappropriately. But Chevron seeks relief from the substitute judgment
issued by the three-judge court, which did not include the trial judge and did not
consider the report. And Chevron has chosen not to contest its liability for
environmental damage, which the three-judge court found based on an
72
“independent and complete review of the conflicting evidence.” Arkison, 134 S. Ct.
at 2175. Chevron therefore cannot demonstrate that its alleged injuries are “fairly
traceable to the challenged action of the defendant, and not the result of the
independent action of some third party.” Lujan, 504 U.S. at 560.16
1.
The appellate court’s substitute judgment—the
product of a de novo review of the record—breaks any
causal link between alleged trial-level improprieties
and Chevron’s injuries.
Chevron has failed to prove any causal link between its alleged injuries
(which flow from the substitute judgment) and the alleged wrongdoing (which
concerns the provisional judgment). After the trial court issued its 2011 judgment,
an independent three-judge court reviewed the record por el merito de los autos—a
standard of review that this Court has recognized is “similar to the American
standard of de novo review” but “applicable to questions of both fact and of law.”
Naranjo, 667 F.3d at 237; SPA-629 (Código de Procedimiento Civil, art. 838). Indeed, in
The district court considered it “hornbook law” that standing is
determined only at the time the action is brought, and that the jurisdictional
problems raised are therefore questions of mootness, not standing. SPA-320 n.1230.
But when a party “seeks new relief, he must show (and the District Court should
have ensured) that he has standing to pursue it.” Salazar v. Buono, 559 U.S. 700, 731
(2010) (Scalia, J., concurring). As the “party invoking federal-court jurisdiction,”
Chevron “‘bears the burden of showing that [it] has standing for each type of relief
sought.’ A plaintiff cannot sidestep Article III’s requirements by combining a
request for injunctive relief for which he has standing with a request for injunctive
relief for which he lacks standing.” Id. (quoting Summers v. Earth Island Institute, 555
U.S. 488 (2009); citing Los Angeles v. Lyons, 461 U.S. 95, 105 (1983)).
16
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civil-law systems like Ecuador’s, the term “‘appeal’ has a special meaning … that is
unfamiliar in the United States” because the reviewing court “arrive[s] at an
independent determination of what the facts are and what their significance is.”
John Henry Merryman & Rogelio Pérez-Perdomo, The Civil Law Tradition: An
Introduction to the Legal Systems of Western Europe and Latin America 121 (3d ed. 2007). In
these systems, “fact-finding will be reassigned from the court that did the primary
fact-gathering,” John H. Langbein, The German Advantage in Civil Procedure, 52 U. Chi.
L. Rev. 823, 856-57 (1985), resulting in a “[f]ull redetermination of the law and the
facts” and a “substitute trial court decision[].” José Rafael Bustamente, Ecuador, in
Civil Appeal Procedures Worldwide 262, 263, 266 (Charles Platto ed., 1992).17
Chevron cannot overcome this causation problem by pointing to the threejudge court’s refusal to adjudicate Chevron’s criminal accusations against Donziger.
Just as a U.S. court would not hold a criminal hearing amid a civil trial to assess a
possible violation of a witness-bribery statute, the three-judge Ecuadorian court
lacked “jurisdiction to hear [Chevron’s claims of] collusive action,” which Chevron
could bring separately under Ecuador’s Collusion Prosecution Act. A-3543.
Chevron received a full review of the factual and legal determinations on appeal—
For this reason, “Chevron’s expert on Ecuadorian law” previously
admitted to this Court that “the Ecuadorian judgment remained unenforceable
until the intermediate court issued its decision.” Naranjo, 667 F.3d at 237; see also
Código de Procedimiento Civil, art. 300(5); Ley de Casación, art. 10.
17
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determinations that it declined to challenge here—and the judgment against it
disregarded the allegedly tainted evidence. That dooms its case for causation.
2.
The district court’s conclusion about the standard of
review contradicts Ecuador’s highest court on a
question of Ecuadorian appellate procedure.
Aware of Chevron’s causation problem, the district court tried to get around
it in two ways: (1) by launching a wholesale attack on Ecuador’s judiciary based on
the testimony of a political talking head, SPA-326 n.1251, and (2) by “finding” that
the three-judge court did not actually engage in de novo review. SPA-426. But
questions of foreign law are questions of law, not fact. See Fed. R. Civ. P. 44.1. And
in Ecuador, as in the United States, the question whether a court applied the
correct standard of review is a question of law. It is also one the Ecuadorian
Supreme Court answered: It found that the intermediate court properly exercised
de novo review—directly contradicting the district court’s “finding” in this case. A3605 (“[T]here has been a correct weighing of the evidence in accordance with
legal standards.”).
A federal district court cannot use its authority as a fact-finder to make
pronouncements of another nation’s law that contravene that nation’s highest court.
The purpose of Rule 44.1 was “to abandon the fact characterization of foreign law
and to make the process of determining [foreign] law identical with the method of
ascertaining domestic law to the extent that it is possible to do so.” Wright & Miller,
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11 Fed. Prac. & Proc. § 2444 (3d ed. 2014). If the rule means anything, it is that the
pronouncements of a foreign supreme court on the same issue, in the same case control.
Federal courts are bound by the decisions of state high courts when sitting in
diversity jurisdiction. See Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938). A sovereign
nation’s high court deserves at least as much respect “as a matter of
comity.” Diorinou v. Mezitis, 237 F.3d 133, 142 (2d Cir. 2001); see Doug M. Keller,
Interpreting Foreign Law Through an Erie Lens, 40 Tex. Int’l L. J. 157 (2004).
Even beyond comity, it is difficult to understand how a U.S. trial judge
would be better positioned than Ecuador’s Supreme Court to assess an Ecuadorian
appellate court’s compliance with Ecuadorian standards of review. As Judge Rakoff
noted in Aguinda, the idea that an American judge “is better equipped than an
Ecuadorian judge to apply Ecuadorian law to Spanish-language testimony and
documents relating to 30 years’ of activities … in an Amazonian rain forest is
preposterous.” Aguinda v. Texaco, Inc., 142 F. Supp. 2d 534, 552 (S.D.N.Y. 2001),
aff’d as modified, 303 F.3d 470 (2d Cir. 2002). It is even more “preposterous” in light
of the history: This litigation was moved from the U.S. to Ecuador in the first place
based in part on Chevron’s representation that “Ecuador’s courts are far better
suited to apply their own laws.” Appellee Br. 67 in Aguinda v. Texaco, Inc., No. 20017756 (2d Cir., filed Dec. 20, 2001).
76
In any event, the Ecuadorian Supreme Court was correct to conclude that
the three-judge court considered the record with care. That court found a number
of small errors in the previous court’s analysis: that it had mistakenly read a unit of
measurement as milligrams, instead of micrograms, A-463; that one sample had
the wrong expert’s name attributed to it, id.; that a sample showing a certain
amount of benzene contamination was misreported, id. When Chevron alleged that
the trial judge’s ruling referred to evidence not in the record (which Chevron
claimed was proof of fraud), the three-judge panel found where in the record the
evidence was located. A-463. And the court’s judgment reversed the trial court’s
findings as to mercury contamination, noting an error in the judge’s assessment of
the evidence. A-468.
Disregarding all of this, the district court based its “factual finding” on
uninformed assumptions about Ecuadorian appellate procedure. The court
asserted—without citation—that “additional evidence presented at trial reveals”
that the three-judge court did not engage in the appropriate level of review. SPA426 n.1568. What evidence, exactly? The court did not say.
Instead, the court surmised that “it would have been impossible for any
court to have conducted a de novo review of the 188-page judgment and the trial
record in the time the appellate court rendered its decision.” SPA-427. But
elsewhere, the court admitted that it had been given no “evidence or foreign law
77
materials explaining the procedure for selection of appellate judges under
Ecuadorian law.” SPA-295 n.1149. So on what basis did the court make this
determination other than armchair speculation? There were nine months between
the selection of the first appellate panel and the issuance of the substitute judgment.
A-1228. Yet, in the absence of any evidence, the district court not only refused to
defer to Ecuador’s Supreme Court but also made the most unfavorable
assumptions possible: that the only time in which the three judges could review the
case was after establishment of the final panel, five weeks before the judgment, and
that this length of time made it impossible for them to engage in meaningful review.
Although the court pointed to the total number of pages in the Ecuadorian record
to back up its assumptions, that number is surely inflated by Chevron’s known
propensity to “bombard [courts] with distracting and irrelevant documents.”
Republic of Ecuador, 638 F.3d at 388 n.2. And the district court itself issued a 586page decision with over 1,800-plus footnotes less than a month after briefing was
completed in this case.
In a particularly strange and conclusory statement, the district court declared
that “Chevron’s injuries are not attributable to a cause independent of defendants’
ghostwriting, bribery, and other misconduct.” SPA-416. But the court did not
explain how it ruled out the obvious independent cause: Chevron’s own decadeslong illegal pollution in Ecuador, which Chevron chose not to contest here.
78
Reconsidering the evidence of that pollution de novo, the three-judge court held
Chevron liable and entered judgment against it—a judgment on which Chevron
has cast no doubt in this appeal. As a result, Chevron cannot prove that its injuries
are “fairly traceable” to the misconduct it alleges, and so it does not have
constitutional standing to bring this case. Lujan, 504 U.S. at 560.18
B.
Chevron failed to demonstrate any concrete injuries that
could be redressed by the relief sought.
To have standing, Chevron must also demonstrate that it is “likely, as
opposed to merely speculative, that [its] injury will be redressed by a favorable
decision.” Id. at 561. Chevron has not done so. The district court grounded
Chevron’s standing in three asserted injuries—none of which will be likely
redressed by the relief granted.
Chevron first asserts that it has suffered harm due to the seizure of
trademark assets belonging to one of its subsidiaries in Ecuador. ECF No. 1847 at
6. But Chevron has not demonstrated that its relief will likely redress this injury.
Chevron does not contend that the relief nullifies the embargo over the trademarks
in Ecuador. Rather, Chevron says that it has satisfied redressability because the
relief bars the Ecuadorian defendants from receiving funds from a future auction of
This is to say nothing of Chevron’s failure to show “but for” causation
under RICO, which we address in Section IV. Holmes v. Sec. Investor Prot. Corp., 503
U.S. 258, 268 (1992).
18
79
the trademarks, which would instead go “in constructive trust for Chevron.” ECF
No. 1863 at 13. That relief, according to Chevron, is “more than adequate” to
establish standing. Id. at 14.
Hardly. Here is what would have to happen for the district court’s injunction
to redress this injury:
(1) The Republic of Ecuador would have to hold an auction of the
subsidiary’s trademark at some point in the future;
(2) someone would have to buy the trademarks;
(3) the Ecuadorian co-defendants in this case would have to be selected out of
all the individuals eligible to receive the funds from the auction;
(4) the Ecuadorian courts (which Chevron claims do “not follow the rule of
law,” id.) would have to agree to enforce this Court’s judgment deeming
them corrupt; and
(5) the Ecuadorian courts would then have to give the money back to
Chevron.
That is not only well short of “likely”—it is completely far-fetched. A plaintiff
“cannot rely on speculation about ‘the unfettered choices made by independent
actors not before the court,’” and no foreign court is bound by this Court’s decision.
Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138, 1150 n.5 (2013). It is nothing short of
absurd to think that Chevron has pursued this lawsuit to obtain compensation for
the loss of the dormant Ecuadorian trademarks of its subsidiary.
Chevron’s second asserted injury relied on by the district court is the
Ecuadorian courts’ embargo of a $96 million arbitral award against the Republic
80
of Ecuador. SPA-326. But Chevron has not even alleged, let alone proven, that this
award will likely be redressed by the district court’s injunction. As with the
trademark injury, redressability depends on Ecuadorian courts (a) enforcing the
district court’s opinion, (b) directing the embargoed funds to the two Ecuadorian
defendants in this case, and then (c) requiring them to turn the money over to
Chevron. Neither the district court nor Chevron gives any reason to think such a
chain of events is even plausible, much less likely.
Moreover, Chevron cannot rely on either of these two alleged injuries to
obtain standing for its claims against Mr. Donziger. He has not received any funds
from any auction, nor from any arbitral award, nor is he slated to do so. Chevron
makes no effort whatsoever to tie him to these so-called injuries or to otherwise
establish how its claims against him could be rooted in them.
The final injury on which the district court relies to assert jurisdiction is
Chevron’s legal fees to defend against enforcement of the judgment. SPA-327. But
neither the fees already incurred nor those that Chevron expects to incur in the
future would be redressed by the district court’s injunction. As for fees incurred,
Chevron cannot recover them because it dropped its damages claim. As for fees
expected, the district court’s injunction, by its own terms, does not prevent anyone
from enforcing the judgment overseas. SPA-496. So Chevron’s money will be spent
regardless of the district court’s injunction.
81
C.
Because the district court lacked jurisdiction to hear this
case, its findings—particularly findings related to
professional misconduct—should be vacated.
There is no such thing as “hypothetical” jurisdiction—“[w]ithout jurisdiction
the court cannot proceed at all in any cause.” Steel Co. v. Citizens for a Better Env’t,
523 U.S. 83, 101 (1998). For that reason, a court’s decision that proceeds despite a
lack of jurisdiction is “utterly void and unavailable for any purpose.” Earle v.
McVeigh, 91 U.S. 503, 507 (1875). But lacking such jurisdiction, the district court
declared a lawyer guilty of bribing a judge and pilloried a nation’s entire judiciary,
basing those findings almost entirely on paid testimony from an admitted bribetaker and a foreign politician. In Naranjo, this Court made clear that it was
inappropriate for Chevron to seek “such an advisory opinion.” 667 F.3d at 246.
Now that Chevron has obtained one in the form of the district court’s opinion, the
only remedy for those affected by the court’s declaratory findings is to explicitly
vacate them. See Cunningham v. BHP Petroleum Great Britain PLC, 427 F.3d 1238,
1245–46 (10th Cir. 2005) (vacating all actions of the district court where the court
lacked subject-matter jurisdiction). That is what this Court should do.
But even if this Court does not vacate all the district court’s findings, it
should at least vacate those that implicate Mr. Donziger in professional misconduct.
This Court’s power to vacate factual findings of professional misconduct is well
established, and the district court’s findings here amounted to “much more than
82
implied criticism.” In re Goldstein, 430 F.3d 106, 111 (2d Cir. 2005). Because such
findings result in significant “reputational consequences and potential costs,” id.,
they can be subject to appeal when there is “a finding that an attorney is guilty of
specific misconduct,” Keach v. Cnty. of Schenectady, 593 F.3d 218, 225 (2d Cir. 2010).
“Even factual findings by themselves” can be grounds for an appeal where
appellate jurisdiction would otherwise be lacking. Sheppard v. River Valley Fitness One,
L.P., 428 F.3d 1, 6 (1st Cir. 2005).
The district court—without providing the standards of proof or procedural
safeguards that the Constitution mandates for criminal trials—found that Mr.
Donziger, as an attorney, gave his “express authorization” for payments to bribe a
judge. SPA-293. And the court based this finding solely on the testimony of a paid
witness, Alberto Guerra, who admitted to making false statements about the
Ecuadorian proceedings to sweeten his deal with Chevron. A-813. Chevron paid
Guerra a monthly stipend of $10,000 in addition to particular payments for
individual pieces of evidence, such as $20,000 for his phone and bank records. A771; A-800. Such payments are “absolutely indefensible.” In re Robinson, 136 N.Y.S.
548 (N.Y. App. Div. 1912) (“The payment of a sum of money to a witness to ‘tell
the truth’ is as clearly subversive of the proper administration of justice as to pay
him to testify to what is not true.”); ECF No. 1423-2 (Erwin Chemerinsky
declaration explaining that “payment of a salary to a witness, in exchange for the
83
witness’s agreement to testify … is a clear violation” of ethics rules). If any case calls
for vacating a court’s findings for lack of jurisdiction, this one does.
II.
Chevron’s collateral attack on the Ecuadorian judgment violates
bedrock international-comity principles and is authorized by
neither state nor federal law.
This is Naranjo all over again. Then, as now, Chevron sought and obtained
from the district court a determination that the Ecuadorian judgment was procured
by fraud and an injunction preventing its enforcement. Naranjo, 667 F.3d at 238.
Chevron sought, as its complaint put it, a declaration that “any Lago Agrio
judgment is unenforceable and non-recognizable, including but not limited to
under the United States Constitution, federal common law, New York common
law principles of comity, and/or New York’s Recognition of Foreign Country
Money Judgments Act,” on “grounds of fraud, failure to afford procedures
compatible with due process, lack of impartial tribunals, and contravention of
public policy.” ECF No. 1, at 144; see also ECF No. 283, at 162.
In addition to that breathtakingly broad claim, Chevron also asked this
Court, in the alternative, to affirm the district court’s preliminary injunction “in
light of Chevron’s RICO and state-law claims, which are based on—among other
things—Donziger and his co-defendants’ racketeering enterprise aimed at extorting
a ‘settlement’ from Chevron” and “common law fraud.” Appellee Br. 70-71 in
Chevron v. Naranjo, No. 11-1150 (2d Cir., filed June 23, 2011).
84
This Court was unpersuaded. It reversed the injunction the day after oral
argument. And it not only reversed but ordered Judge Kaplan to dismiss Chevron’s
declaratory-relief claim “in its entirety.” Naranjo, 667 F.3d at 247. The Court held
that there was “no legal basis for the injunction that Chevron seeks” and that, “on
these facts, there will be no such basis until judgment-creditors affirmatively seek to
enforce their judgment in a court governed by New York or similar law.” Id. at 242.
The Court took care to anchor its holding not only in an interpretation of New
York’s Recognition Act, but also in “the common law principles it encapsulates” as
well as principles of international comity and the role of American courts as
“responsible participant[s] in an international system of justice” and an “overall
enforcement-facilitation framework.” 667 F.3d at 241-43.
Yet tucked away at the tail end of its opinion, the district court now offers a
reading of Naranjo as “limited to the panel’s interpretation of the New York’s
Recognition Act.” SPA-493. It dismisses this Court’s discussion of international
comity as “tied to the panel’s discussion of the Recognition Act,” whereas the
current injunction is based on “an entirely different statute, RICO, and nonstatutory state law causes of action about which the Naranjo panel said nothing
substantive.” Id. But this Court necessarily rejected Chevron’s alternative argument
for affirmance on its RICO and common-law theories when it reversed the
85
injunction: Had it found those arguments persuasive, it would have, and should
have, upheld the injunction on those grounds.
More broadly, the district court’s decision, if upheld, would render Naranjo a
dead letter. If the district court is correct, disappointed litigants from around the
globe should pack their bags and book a one-way ticket to Foley Square. They may
not obtain a decree that will be obeyed back home, and they may never actually
face enforcement in New York, but they can air their grievances of fraud,
corruption, misconduct, and bias and be guaranteed an advisory opinion by a
judge in New York. Such a regime would “unquestionably provoke extensive
friction between legal systems,” unnecessarily foster “challenges to the legitimacy of
foreign courts” (even where, as here, the enforceability of the judgment “might
never be presented in New York”), and encourage litigants to “seek a res judicata
advantage” for use in “potential enforcement efforts in other countries.” Naranjo,
667 F.3d at 246. But as we now explain, even if Naranjo permitted it, even the most
expansive sources of state law (the common law) and federal law (RICO) do not
provide a basis for the extraordinary relief granted by the district court here.
A.
The district court’s “non-statutory” analysis provides no
legitimate basis to circumvent Naranjo.
Of all the oddities in the district court’s 586 pages of opinion and appendices,
its discussion of what the court calls the “non-statutory claims for equitable relief
with respect to the judgment” is perhaps the oddest. SPA-330-346. Invoking Lord
86
Coke and John Marshall, the court concludes that the common law authorizes the
very thing this Court rejected in Naranjo—a “cause of action[] by which
disappointed litigants in foreign cases can ask a New York court to restrain efforts
to enforce those foreign judgments against them.” Naranjo, 667 F.3d at 243. Along
the way to that surprising conclusion, the court cites a law student’s note from
1928; several eighteenth- and nineteenth-century English cases (including one from
1750 in which the Lord Chancellor settled a boundary dispute between the
colonies); and a bookshelf’s worth of equity treatises. SPA-330-346. From all this,
the court draws the lesson that courts at equity could enjoin judgments procured by
fraud “at least since the seventeenth century,” and that “[t]here is a good deal of
learning” on the sort of fraud that supports an independent action for relief from a
judgment. SPA-331; SPA-334.
The court assembles an impressive library of authorities, but what exactly
are these “non-statutory claims” and how did they end up in this case? Are they
related to any claim pleaded in Chevron’s complaint, or were they dreamt up in
chambers after the trial? How many of these “non-statutory claims” are there
anyway? (The opinion vacillates between the singular and the plural.) Are they
grounded in state or federal law? If federal law, under what authority? If state law,
how does any of this square with Naranjo? And why in the world would New York’s
common law govern litigation conduct in a South American jungle courthouse
87
three thousand miles away? To say the least, the district court’s opinion raises more
questions than it answers.
For starters, although the cases cited by the district court are overwhelmingly
federal, its analysis cannot be properly grounded in federal law. There is a simple
reason: “There is no federal general common law.” Erie, 304 U.S. at 78. As every
first-year law student learns, “[t]he source of substantive rights enforced by a
federal court under diversity jurisdiction, it cannot be said too often, is the law of
the States.” Guaranty Trust v. York, 326 U.S. 99 (1945). The state, “whether its voice
be the legislature or its highest court,” supplies the rule of decision—not the
wisdom of learned federal district judges. Id. And that is true “whether the
remedies be sought at law or may be had in equity.” Id.
But the district court effectively declared the existence of a new cause of
action under New York law—an affirmative fraud-on-the-court claim by a
judgment debtor—without so much as a nod in the direction of New York’s
“legislature” or “its highest court.” The court didn’t even bother to cite any New
York decisions from the past century.
Whatever may have been true “in the time of Lord Coke” (SPA-332), New
York’s Uniform Foreign Country Money-Judgments Recognition Act, N.Y.
C.P.L.R. §§ 5301-5309 (article 53), enacted in 1970, codifies the preexisting
common law. CIBC Mellon Trust Co. v. Mora Hotel Corp. N.V., 792 N.E.2d 155, 159
88
(N.Y. 2003). This is presumably what this Court meant in Naranjo when it grounded
its decision in both the Recognition Act and “the common law principles it
encapsulates.” 667 F.3d at 240. New York courts have been clear: For foreign
money judgments that “come directly within the scope of article 53,” the Act
displaces and preempts the common law. Overseas Dev. Bank in Liquidation v. Nothmann,
480 N.Y.S.2d 735, 738 (N.Y. App. Div. 1984). And the Recognition Act presumes,
as a matter of New York law, that a foreign money judgment “is conclusive
between the parties” until challenged in an enforcement proceeding.” N.Y.
C.P.L.R. § 5303. The district court’s decision to fashion a new common-law claim
thus contravenes both Naranjo and the New York Recognition Act and “would turn
[the international judgment-enforcement] framework on its head.” Naranjo, 667
F.3d at 241.
In any event, New York’s common law would not recognize such a claim
even apart from the Recognition Act or international-comity considerations: “A
litigant’s remedy for alleged fraud in the course of a legal proceeding ‘lies
exclusively in that lawsuit itself,’ … not a second plenary action collaterally
attacking the judgment in the original action.” Vinokur v. Penny Lane Owners Corp.,
703 N.Y.S.2d 35, 36 (N.Y. App. Div. 2000). This does not mean that a “defeated
litigant” is “without redress” for fraud; rather, “[h]e can apply in the original
action, and in a proper case obtain relief.” Crouse v. McVickar, 100 N.E. 697, 698
89
(N.Y. 1912). If it is a foreign judgment, the judgment debtor has two choices: seek
relief from the judgment in the foreign forum or wait and raise fraud as a defense
in an enforcement proceeding in New York, if such a proceeding is ever brought.19
Federal civil procedure follows a similar approach. If a litigant complains
that another court’s judgment was procured by fraud and seeks relief under Rule
60—a procedure not raised by Chevron here but invoked by the district court,
SPA-331 n.1263—the rule is simple: “The court that was the victim of the fraud is
the only court that can decide the question and it cannot be raised by an
independent action in another court.” Wright & Miller, 11 Fed. Prac. & Proc. § 2870
(3d ed. 2014) (emphasis added). There are good reasons for that longstanding rule.
The federal courts recognize that “for a nonissuing court to entertain an action for
such relief would be seriously to interfere with, and substantially to usurp” the
issuing court’s authority. Lapin v. Shulton, Inc., 333 F.2d 169, 172 (9th Cir. 1964).
Thus, “considerations of comity and orderly administration of justice demand that
the nonrendering court should decline jurisdiction of such an action” Id. Of course,
the intrusion and affront to comity are far greater when a court does what it did
here: prematurely leaps to declare a judgment of a foreign sovereign’s courts—and,
See McDonald v. McDonald, 239 N.Y.S. 533, 536 (N.Y. 1930); Khallad v. Blanc,
947 N.Y.S.2d 859, 862 (N.Y. App. Div. 2012); Trebilcox v. McAlpine, 17 N.Y.S. 221,
223 (N.Y. App. Div. 1891); Banco Do Brasil v. Madison S. S. Corp., 307 N.Y.S.2d 341,
345 (N.Y. Sup. Ct. 1970).
19
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indeed, a nation’s entire legal system—to be unworthy of respect. Naranjo, 667 F.3d
at 242-246.20
Neither Chevron nor the district court could point to a single case in which a
U.S. court entertained a preemptive action to enjoin enforcement or collection of a
foreign judgment based on alleged fraud on the foreign court. If comity
considerations dictate that a federal district court in New York lacks authority to
entertain a collateral attack on the judgment of a sister district court in, say,
Connecticut, then a fortiori, it lacks “authority to evaluate [a lawyer’s] actions before
[foreign] courts.” Manez v. Bridgestone Firestone N. Am. Tire, 533 F.3d 578, 588 (7th
Cir. 2008) (“Whether the proceedings in [Mexico] were conducted in an honest
and upright manner is a matter for the Mexican judicial authorities and bar
authorities, not for us.”); Veltze v. Bucyrus-Erie Co., 154 F.R.D. 214, 217 (E.D. Wis.
1994) (“[T]he proper forum … to challenge the enforceability of the Peruvian
judgment is in the Peruvian court”). One of the many district courts in which
By preemptively enjoining enforcement in all 50 states, the district court’s
injunction also raises a domestic comity problem. Cf. Pennzoil v. Texaco, 481 U.S. 1, 11
(1987). Indeed, “the Anti-Injunction Act bars federal injunctions against the
enforcement of judgments allegedly obtained by fraud.” 19 Stacy L. Davis & Lisa A.
Zakolski, Federal Procedure, Lawyer’s Ed., 47:117 (2014); 28 U.S.C. § 2283; Vendo Co. v.
Lektro-Vend Corp., 433 U.S. 623 (1977). But the district court precluded enforcement
proceedings in all 50 states without even considering whether “the relevant legal
standards differed.” Smith v. Bayer, 131 S. Ct. 2368 (2011); see also Yahoo! v. La Ligue
Contre Le Racisme, 433 F.3d 1199, 1213 (9th Cir. 2006) (highlighting the “difficult”
question of “whose law governs” when a dissatisfied litigant seeks a ruling that a
foreign’ court’s judgment is “unenforceable anywhere in this country”).
20
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Chevron brought § 1782 proceedings summed it up: “While fraud on any court is a
serious accusation that must be investigated, it is not within the power of this court
to do so, any more than a court in Ecuador should be used to investigate fraud on
this court.” In re Application of Chevron Corp., No. 3:10-cv-00686, ECF No. 108, at 3
(M.D. Tenn. Sept. 21, 2010).
And even if a federal district court in New York were somehow an
appropriate forum for such issues, it would be Ecuadorian law—not New York
law—that would govern the relevant conduct. See Schultz v. Boy Scouts of America, Inc.,
480 N.E.2d 679, 198 (N.Y. 1985) (when “the appropriate standards of conduct,
rules of the road, for example” are at issue, “the law of the place of the tort” usually
controls); see also Rose Hall, Ltd. v. Chase Manhattan Overseas Banking Corp., 576 F. Supp.
107, 127-28 (D. Del. 1983) (applying Jamaican law to a fraud-on-the-court claim
concerning a Jamaican court). A district court is bound to apply state conflict-oflaws rules, even when the rule directs the court to apply the substantive law of a
foreign country. See Zimmermann, Inc. v. Challoner, 423 U.S. 3, 3-4 (1975) (reversing
for failure to apply Cambodian law in Texas to a dispute between an American
solider and American company arising out of a tort in Cambodia). As it happens,
Ecuadorian law provides a tailor-made remedy that New York law does not: the
Collusion Prosecution Act, which creates a private civil action to air collateral
allegations of fraud in Ecuadorian court proceedings. SPA-630. Moreover,
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Chevron has filed a case with the Constitutional Tribunal of Ecuador in which it
has raised its fraud claims. The availability of these local remedies should counsel
further hesitation before any unnecessary and unauthorized intervention by U.S.
courts.
Finally, the district court’s invention of a new common-law claim after trial
raises serious due-process concerns. In our system, courts may not surprise
defendants with decisions on “totally unpleaded, unlitigated claim[s].” Pinkley v. City
of Frederick, 191 F.3d 394, 402 (4th Cir. 1999). In an apparent anticipation of this
objection, the district court decreed, under Federal Rule of Civil Procedure 15(b)
that “all of the issues were tried by consent even if all were not specifically raised in
the pleadings.” SPA-475. But Rule 15(b) permits relief on a theory that didn’t
appear in the complaint “only if that theory was squarely presented and litigated by
the parties at some stage or other of the proceedings.” Evans Prods. Co. v. West Am.
Ins. Co., 736 F.2d 920, 923–24 (3d Cir. 1984). Here, “the absence of express or
implied consent renders it impossible to fit the district court’s freelancing within the
confines of Rule 15(b).” Rodriguez v. Doral Mortgage Corp., 57 F.3d 1168, 1173 (1st Cir.
1995). A court so quick to condemn another nation’s courts for lacking due process
should take better care to ensure it at home.
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B.
The federal RICO statute does not provide a vehicle for
collaterally attacking a judgment—let alone the judgment
of a foreign sovereign’s court system.
Chevron’s attempt to circumvent Naranjo and the Recognition Act by
framing its fraud-on-the-court claims as RICO claims fares no better. RICO is
many things, but it is not boundless. One thing it is not is an all-purpose tool for
attacking the judgments of courts around the world. This Court shouldn’t open the
floodgates.
1. It’s no surprise that RICO has attracted more than its fair share of
unhappy litigants hawking disguised fraud-on-the-court claims. But every circuit to
consider the question has held the same thing: That “the remedies under RICO do
not include setting aside a prior judgment or undermining its preclusive effect by a
collateral attack.” Knight v. Mooring Capital Fund, LLC, 749 F.3d 1180, 1187 (10th Cir.
2014) (“The circuits to consider the matter have rejected such relief.”). With
respect to domestic judgments, these decisions rest on the unavailability of
collateral attack as a remedy under RICO, collateral-estoppel and res-judicata
principles, and the need for finality of judgments and an orderly end to litigation. Id.
When it comes to foreign judgments and arbitral awards, they also rest on comity
and respect for the applicable international enforcement framework. Ultimately,
they reflect a widely shared understanding that “the judicial system cannot tolerate
94
litigants who refuse to accept adverse decisions.” Homola v. McNamara, 59 F.3d 647,
651 (7th Cir. 1995).21
Because RICO is a magnet for fraud-on-the-court claims, courts must
frequently reprimand litigants for “seek[ing] to relitigate [a previous case] by
recasting [their] allegations as a federal RICO claim.” Polur v. Raffe, 912 F.2d 52,
56 (2d Cir. 1990); see also Kamilewicz v. Bank of Boston Corp., 92 F.3d 506, 511 (7th Cir.
1996) (affirming dismissal of a case that “was ‘dressed up’ as a claim for RICO
damages” but “was, nevertheless, a collateral attack on a state court judgment”).
Chevron’s litigation budget may be a bit larger than that of the typical disaffected
litigant who cries RICO, but the essence of its claim is no different.
If RICO is unavailable as a vehicle for collaterally attacking the result of
prior proceedings generally, as the circuits have uniformly held, then it is surely
unavailable as a vehicle for attacking the judgment of a foreign court system—in this
case, the Ecuadorian appellate court’s substitute judgment, as affirmed by
Ecuador’s Supreme Court. To treat acts of alleged litigation misconduct as
“predicate acts for purposes of RICO claims” would “improperly apply the RICO
statute, invite forum shopping of the most pernicious sort, and embroil this Court
in the supervision and review of proceedings in … a foreign court.” Eli Lilly & Co. v.
Roussel Corp., 23 F. Supp. 2d 460, 483 (D.N.J. 1998) (“The remedy for any asserted
21
To be clear, we are not asserting a collateral-estoppel defense.
95
improprieties Lilly believes may have occurred in … the Italian [courts] … lie[s]
with the … Italian courts,” not under RICO). Indeed, our research has not
uncovered a single case in which an American court has found it appropriate to
invoke RICO as authority to vindicate a claim that a foreign court’s judgment has
been procured by fraud, or to preemptively enjoin the enforcement and collection
of a foreign judgment.
Gulf Petro Trading Co. v. Nigerian National Petroleum, 512 F.3d 742, 749 (5th Cir.
2008), a case much like this one, shows how other circuits have approached the
problem. There, an American oil company filed a complaint in federal court under
RICO and the common law, arguing that bribery, corruption, and ex parte
communications had tainted a foreign arbitral proceeding. Id. at 749. The
company’s argument was that it had “alleged a pattern of racketeering and
conspiratorial conduct that, while arising in the context of [the foreign]
proceedings, constitute[d] an independent violation of federal and state law and
compel[led] relief analytically distinct from vacatur.” Id. at 747. The Fifth Circuit
disagreed. Even though “the specific allegations of bribery and corruption” were
“separate” from the underlying dispute, the claims nevertheless constituted a
collateral attack because the company’s fundamental claim was “that wrongdoing
had tainted” the proceedings such that the result was procured by fraud. Id. at 750.
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Chevron’s case is no different. Here, as there, “the ultimate significance of
the conduct [Chevron] complains of can only be found in the effect that it had” on
the Ecuadorian judgment, and it is plain that Chevron’s “true objective in this suit”
is to redress harm it will allegedly suffer as a result of the judgment. Id. This is selfevident from the district court’s opinion and judgment: All of the remedies granted
to Chevron are related to the enforcement or collection of the Ecuadorian
judgment. SPA-589. As the district court itself puts it: “Chevron here seeks a
determination that the defendants procured the Judgment by fraud and through
violation of the RICO statute.” SPA-493. And while Gulf Petro involved a foreign
arbitration proceeding, the upshot is the same: Both the New York Convention on
the Recognition and Enforcement of Foreign Arbitral Awards, at issue there, and
the New York Recognition of Foreign Country Money Judgments Act, at issue
here, provide the exclusive means for recognizing and enforcing the results of
foreign proceedings. Compare N.Y. C.P.L.R. § 5304(b)(6) with 9 U.S.C. § 201. In
either case, a RICO suit whose alleged injury stems entirely from the judgment
would turn the relevant international enforcement framework “on its head.”
Naranjo, 667 F.3d at 241.
2. Chevron’s attempted use of RICO to collaterally attack the Ecuadorian
judgment is also inconsistent with Federal Rule of Civil Procedure 60, which
provides an exclusive federal scheme for relief from a judgment absent a “clear
97
inconsistency” or “demonstrated congressional purpose” to displace it. Grossman v.
Johnson, 674 F.2d 115, 122 (1st Cir. 1982). Rule 60 is intended to “deal with the
practice in every sort of case in which relief from final judgments is asked, and
prescribe the practice.” Fed. R. Civ. P. 60, 1946 Advisory Comm. Notes; see, e.g.,
Hendrick v. H.E. Avent, 891 F.2d 583, 585–87 (5th Cir. 1990) (holding that a
collateral attack could not be accomplished through RICO, but had to be brought
via a Rule 60 motion in the original court). It would be very odd indeed to make
Rule 60 and its limited exceptions the only means for relief from a judgment in
federal court and then allow for a broad statutory cause of action for relief from a
judgment under RICO—one that allowed relief in alternative forums to boot.
There is no evidence that Congress intended such an odd result. RICO, like any
federal statute, must be “construed as to harmonize with the Federal rules if that is
at all feasible.” Hubbard v. Haley, 262 F.3d 1194, 1197 (11th Cir. 2001). Absent “a
clear exemption from the Rule” by Congress, Rule 60’s exclusive framework
controls. Gaubert v. Fed. Home Loan Bank Bd., 863 F.2d 59, 67 (D.C. Cir. 1988).
3. Because “an act of Congress ought never to be construed to violate the
law of nations, if any other possible construction remains,” Murray v. Schooner
Charming Betsy, 6 U.S. 64, 118 (1804), RICO also should not be extended to allow
collateral attacks on foreign judgments in the teeth of clear principles of
international law. RICO is an “expansive” statute, and “when an interpretation of
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a broad, general statute would implicate foreign relations, the Supreme Court has
proceeded cautiously and looked for a clear expression of congressional intent as to
the statute’s scope.” Attorney Gen. of Canada v. R.J. Reynolds Tobacco Holdings, Inc., 268
F.3d 103, 128 (2d Cir. 2001). As Judge Hand explained, “we are not to read
general words … without regard to the limitations customarily observed by nations
upon the exercise of their powers.” United States v. Aluminum Co. of Am., 148 F.2d 416,
443 (2d Cir. 1945). This Court has endorsed this approach in interpreting RICO.
See R.J. Reynolds, 268 F.3d at 128 (“Adherence to this principle will ensure that the
courts interpret RICO consistently with international law.”). And in Naranjo, this
Court held that concerns for the law of nations are “particularly weighty” when a
court in one jurisdiction acts pursuant to legislation in its own jurisdiction to issue
opinions about the courts of the world. 667 F.3d at 244. The radical step of
transforming RICO into a right of global appellate review should not be taken
without the explicit approval of Congress.
III.
Chevron’s wholesale attack on the integrity and competence of
the Ecuadorian judiciary is foreclosed by judicial estoppel,
offensive to international comity, and contradicted by Chevron’s
own evidence.
As explained in Part I, Chevron’s case has an Achilles’ heel: Chevron cannot
prove that any of the alleged misconduct about which it complains actually caused
the three-judge appellate court’s substitute judgment or the Ecuador Supreme
Court’s affirmance of it. It hasn’t even tried. Instead, Chevron argued below, and
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the district court agreed, that this problem can be escaped by simply declaring that
the work of the Ecuadorian appellate tribunals is “not entitled to any recognition in
consequence of the systemic deficiencies of the Ecuadorian legal system.” SPA-314
n.1251. But that argument fails for three independent reasons: Chevron is estopped
by its previous contrary representations to this Court about the adequacy of
Ecuador’s judiciary; Chevron is further estopped by its promise to abide by the
judgment of an Ecuadorian court; and Chevron’s own evidence demonstrates that
Ecuador’s judiciary has actually improved since the forum non conveniens
determination in Aguinda.
Given the grave threat to comity and the paucity of the evidence, the district
court should not have jumped to condemn an entire nation’s legal system on the
basis of arguments that Chevron is estopped from making. And this Court should
not become an accomplice to Chevron’s two-faced attempt to thwart the afectados’
search for justice by shifting the goalposts across decades and continents.
A.
Chevron’s arguments that Ecuador’s judiciary is
systemically unfair are estopped by its directly contrary
stance during the Aguinda litigation.
Chevron is judicially estopped by its years of ardent representations that
“Ecuador can and does dispense independent and impartial justice.”22 Chevron’s
Appellee Br. 57 in Aguinda v. Texaco, Inc., No. 2001-7756 (2d Cir., filed Dec.
20, 2001) (hereafter “Aguinda Br.”).
22
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insistence that Ecuador is an adequate forum, like Chevron’s promise to submit to
Ecuadorian jurisdiction, was designed to “make the district court more likely to
grant its motion to dismiss.” Republic of Ecuador, 638 F.3d at 389 n.4. These
arguments succeeded, and Chevron got what it asked for—but then changed its
tune when the Ecuadorian trial didn’t reach the conclusion it preferred. This is
exactly the kind of thing that the doctrine of judicial estoppel is designed to
prevent: Chevron has “secured a judgment in [its] favor by virtue of assuming a
given position in a prior legal proceeding” and is now “assuming an inconsistent
position in a later action.” Maharaj v. Bankamerica Corp., 128 F.3d 94, 98 (2d Cir.
1997). Chevron has used the same evidence it used fourteen years ago to reach
opposite conclusions, “changing positions according to the exigencies of the
moment.” New Hampshire v. Maine, 532 U.S. 742, 743 (2001). Chevron’s request
that this Court endorse its about-face threatens “the integrity of the judicial process”
and is precluded by estoppel. Id.
Chevron’s briefing in the district court contradicts its prior stances so
completely that it could have been written by its opposing party in Aguinda.
 The district court and Chevron now analogize this case to Bridgeway Corp. v.
Citibank, 201 F.3d 134 (2d Cir. 2010). ECF No. 1847 at 275; SPA-418
n.1582. But as Chevron argued in Aguinda, “[t]he circumstances in Ecuador
101
are not remotely like those that prevailed in Liberia when this Court decided
Bridgeway.” Aguinda Br. 56.
 Although the district court accepted Chevron’s argument that “the rule of
law is not respected in Ecuador in cases that have become politicized,” SPA428, Chevron’s previous stance was that “[t]he public scrutiny these cases
will receive in Ecuador and/or Peru will further assure a fair adjudication.”
Aguinda Br. 57.
 The district court opinion “draws significant support also from the U.S.
Department of State’s Country Reports,” SPA-419 n.1586, which Chevron
offered in support of its post-trial briefing. See, e.g., ECF No. 1847 at 46 n.12.
But just ask Chevron—these reports “have limited probative value” because
they “do not focus in any detail on civil litigation” and instead “focus on
human rights violations that largely relate to criminal cases.” Aguinda Br. 5859.
Such blatant flip-flopping could only be dictated by the “exigencies of the moment,”
New Hampshire v. Maine, 532 U.S. at 750, betraying a complete inconsistency when
it comes to Chevron’s representation of the facts.
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B.
Chevron’s promise to submit to Ecuadorian jurisdiction
further estops it from arguing that it should not be subject
to the Ecuadorian judgment, and the defenses it reserved
do not apply here.
In addition to being estopped by its inconsistent statements regarding
Ecuador’s adequacy as a forum, Chevron is also estopped by its promise “to satisfy
any judgments in [the Ecuadorians’] favor,” which it said it would contest “only in
the limited circumstances permitted by New York’s Recognition [Act].” Republic of
Ecuador, 638 F.3d at 389.
This promise was not a gesture or incidental to the litigation in any way—it
was a condition that this Court required to uphold the form non conveniens dismissal
that Chevron sought. Aguinda v. Texaco, 303 F.3d at 475. This Court has since held
that “that promise, along with Texaco’s more general promises to submit to
Ecuadorian jurisdiction, is enforceable against Chevron in this action and any
future proceedings between the parties.” Republic of Ecuador, 638 F.3d at 389 n.4.
This RICO action lies far outside of the “limited circumstances” under
which Chevron may contest the judgment. To be sure, when Chevron pursued
arbitration with Ecuador this Court noted that Chevron’s promise does not
“restrict the kind of forum or type of proceeding in which Chevron can raise those
defenses.” Id. at 397. But that proceeding involved “different parties and distinct
claims” from this litigation and was held in an arbitral forum pursuant to an
international treaty. Id. at 396. It therefore did not raise the same estoppel concerns.
103
As this Court stated, judicial estoppel’s purpose is “to protect the integrity of the
judicial process.” Id at 397 (emphasis added). Moreover, Judge Lynch, the author of
both the Republic of Ecuador and Naranjo opinions, noted during oral arguments in
Naranjo that when Chevron attempts to get a U.S. court to preemptively weigh in
on a foreign judgment its promise arises in a “completely different context” from
the Republic of Ecuador arbitration. Oral Arg. Tr. 9/16/11, at 66:9-19. Chevron is
limited by “the scope of the statute and the availability of a forum prepared to
address its claims.” Republic of Ecuador, 638 F.3d at 397. Judicial estoppel makes this
forum unavailable for these claims. Chevron’s claims here run counter to the letter
and the spirit of this Court’s findings in Aguinda II—findings this Court made while
granting Chevron’s request and relying on Chevron’s representations.
Chevron and the district court have attempted to resurrect an argument this
Court put to rest three years ago—that Chevron “is not bound by the promises
made by its predecessors in interest Texaco and ChevronTexaco, Inc.” Republic of
Ecuador, 638 F.3d at 389. The district court attempted to sidestep this Court’s
rejection of the argument by making a factual “find[ing]” that “Chevron did not
merge with Texaco” and concluding that this Court was “misinformed” when it
held to the contrary. SPA-457 n.170. But the district court cannot rewrite history.
On December 20, 2001, ChevronTexaco filed a brief in this Court that could
hardly have been clearer: “As generally known (and thus this Court may take
104
judicial notice), Texaco merged with Chevron Inc.” Aguinda Br. 10 (emphasis added).
There is no doubt that “Chevron Corporation therefore remains accountable for
the promises upon which [this Court] and the district court relied.” Republic of
Ecuador, 638 F.3d at 389 n.3.
C.
Chevron’s own evidence suggests that Ecuador’s situation
has improved since the time Chevron characterized its
judiciary as adequate and promised to submit to its
jurisdiction.
Chevron tries to cover its inconsistency by alleging that the facts about
Ecuador’s judiciary have changed—but the only legitimate evidence it offers
suggests that the changes have been for the better. The district court once again
rests its sweeping denunciation of Ecuador’s judiciary “almost exclusively on the
declaration of Dr. Vladimiro Álvarez Grau.” Naranjo, 667 F.3d at 238. But Dr.
Álvarez admitted at trial that he does not “know anything at all regarding the Lago
Agrio case other than what is made public,” Tr. 2041:1-2, and offered no evidence
even suggesting impropriety in the conduct of the judges handling the Lago Agrio
case or the Corte Provincial de Justicia de Sucumbíos generally.
Instead, Álvarez offered sweeping pronouncements, including his charge that
Ecuador is a “hypocritical democracy,” A1410, where “the judicial branch is under
the control of President Correa.” A1430. Dr. Álvarez—a former presidential
candidate and current editorial columnist—is “an avowed political opponent of the
country’s current President.” Naranjo, 667 F.3d at 238. Even in the United States,
105
where our legal system is the envy of the world, we are accustomed to hearing
similarly broad, politically charged statements from domestic figures who declare
that there is a “systematic breakdown of the rule of law,” Ralph Nader, The Rule of
Law or the Rule of Men?, The Huffington Post (Feb. 5, 2013),23 or that the President
“has rewritten the Constitution for himself as a part of his effort to fundamentally
transform the United States of America,” Jose Delreal, Michele Bachmann: Obama
rewrote Constitution, Politico (Dec. 3, 2013).24 But the district court nearly copied
verbatim the testimony of this Ecuadorian political talking head, citing Dr. Álvarez
52 times in nine pages and corroborating his claims only once. SPA-420-28.
Chevron paid Dr. Álvarez at least $150,000 for his broadsides. A-829.
In addition to their questionable provenance, Dr. Álvarez’s claims are
contradicted by Chevron’s own evidence, which shows that the quality of
Ecuador’s judiciary has actually remained the same or improved since Chevron
fought
for
dismissal
in
Aguinda.
This
hasn’t
stopped
Chevron
from
mischaracterizing the evidence, of course. The U.S. State Department Country
Reports have presented nearly identical descriptions of Ecuador since the mid1990s. But Chevron and the district court cite only the later reports. The district
court, for instance, points to the 2009 State Department Human Rights Report’s
23
24
Available at http://huff.to/1lz5eKm.
Available at http://bit.ly/1xqol.
106
language that “[w]hile the constitution provides for an independent judiciary, in
practice the judiciary was at times susceptible to outside pressure and corruption.”
SPA-429 n.1642. Compare that with the language from previous reports25:
 2006, 2007, 2008: “While the constitution provides for an independent
judiciary, in practice the judiciary was at times susceptible to outside
pressure and corruption.”
 2004: “The judiciary is constitutionally independent but, in practice, was
inefficient and susceptible to outside pressure.”
 2000: “The judiciary is constitutionally independent, but in practice is
inefficient and susceptible to outside pressure.”
 1996: “Members of the Supreme Court preside over a judiciary that is
constitutionally independent but in practice is susceptible to outside pressure.”
The language is identical or nearly so. Elsewhere, the reports indicate that
Ecuador’s judicial reforms in the mid-2000s had a positive effect: Beginning in
2006—two years after the district court claims Ecuador “changed dramatically” for
the worse, SPA-420—every annual report has remarked that Ecuador’s courts are
“generally considered independent and impartial.” Dr. Álvarez, who was a
member of the pre-reform government, characterizes Ecuador’s judicial reforms in
the mid-2000s as “the greatest institutional crisis in recent history,” saying they
created a “disguised dictatorship.” A-1409-10. The State Department Reports,
upon which Chevron and the district court both selectively rely, clearly disagree.
State Department Country Reports are available by year at
http://1.usa.gov/1iXBpsh.
25
107
What’s more, the State Department reports have grown more favorable over
time despite Chevron’s attempts to lobby the highest levels of the State Department
regarding their contents. See Ted Folkman, Chevron, Lobbying, and Lago Agrio, Letters
Blogatory (Oct. 4, 2013), available at http://bit.ly/1z7zTZu. Chevron cited the
more-negative 2000 report in Aguinda to argue that “[t]he current Government of
Ecuador has taken and continues to take vigorous steps to further the
independence and impartiality of the judiciary.” Aguinda Br. at 39. Now, it cites the
more-positive recent reports to claim that Ecuador is systemically corrupt. Rather
than tailor its arguments to the evidence, Chevron has tailored the evidence to its
arguments.
The other evidence given fails to impugn Ecuador’s judiciary at all. The
district court points to a series of actions by President Correa, such as his
declaration in a radio broadcast that “he want[ed] our indigenous friends to win,”
or his evaluation of the judgment as a “historic ruling.” SPA-432. But statements
by an elected official on noteworthy court battles are not evidence of judicial
inadequacy. It is not “uncommon for an American president to comment on
ongoing criminal prosecutions and even urge that wrongdoers be prosecuted in
accord with the president’s priorities.” In re Chevron Corp., 650 F.3d at 293. In the
wake of BP’s 2010 Deepwater Horizon oil spill, for instance, President Obama
remarked that BP had “moral and legal obligations here in the Gulf for the damage
108
that has been done,” and that “[w]e will make BP pay for the damage their
company has caused.”26 Similarly, the district court’s concern over President
Correa’s appointment of a former friend to the position of Prosecutor General is
not an adequate basis for condemning a nation’s legal system. “After all,
presidential transitions in the United States also typically include the replacement
of high-level officials, oftentimes with persons who are friends, or have an even
closer relationship to the incoming president, and it is not uncommon to see a shift
in priorities along with a change in the presidential administration.” In re Chevron
Corp., 650 F.3d at 293. President Kennedy named his own brother as Attorney
General; nobody seriously contends that rendered our system corrupt.
The fact of the matter is that Ecuador is not comparable to those few places
that federal courts have found to lack basic levels of fairness. The district court
cited two examples—Liberia (Bridgeway) and Iran (Bank Melli Iran). But Ecuador is
not in a “state of chaos” as Liberia was during its civil war, where hundreds of
thousands died and “judges” carried out the will of warring factions. Bridgeway, 45 F.
Supp. 2d at 287. And Ecuador is not Iran, where religious courts conduct secret
trials and assert their jurisdiction over civil judicial authorities. Bank Melli Iran v.
Pahlavi, 58 F.3d 1406, 1412 (9th Cir. 1995).
David Jackson, Obama: BP has ‘moral and legal obligations’ to Gulf Coast, USA
Today, available at http://usat.ly/1qf1Yf1; Full text of President Obama’s BP Oil Spill
speech, June 16, 2010, available at http://reut.rs/1jnzWWW.
26
109
“Though it is obvious that the Ecuadorian judicial system is different from
that in the United States, those differences provide no basis for disregarding or
disparaging that system. American courts, though justifiably proud of our system,
should understand that other countries may organize their judicial systems as they
see fit.” In re Chevron Corp., 650 F.3d at 294 (declining to find serious problems in
Ecuador’s justice system); see also Leon v. Million Air, Inc., 251 F.3d 1305, 1313-14
(11th Cir. 2011) (same). Joseph Staats, a political science professor at the University
of Minnesota who specializes in Latin American judicial performance, evaluates
Ecuador as “equal to or better than 55% of all the countries of the world” when it
comes to protecting political rights and civil liberties. ECF No. 400-14 at 214. The
district court’s decision that Ecuador’s judicial system is plagued with problems on
par with those of Iran or war-torn Liberia is contrary to both comity and reality.
IV.
Even setting aside the lack of jurisdiction or legal authority,
Chevron had no cause of action under RICO and RICO does not
authorize any of the relief granted by the district court.
A.
The relief granted by the district court pushes RICO’s
already strained language far beyond the breaking point.
Congress’s “declared purpose” for enacting RICO was “to seek the
eradication of organized crime in the United States.” United States v. Turkette, 452
U.S. 576, 589 (1981). But “[v]irtually everyone who has addressed the question
agrees that civil RICO is now being used in ways that Congress never intended
when it enacted the statute in 1970.” William H. Rehnquist, Remarks of the Chief
110
Justice, 21 St. Mary's L.J. 5, 9 (1989). The “lure of triple damages and access to a
federal courtroom” has led to “inventive” uses of the statute against defendants—
from the Catholic Church to Major League Baseball—that Congress could never
have foreseen. Lee Coppola & Nicolas DeMarco, Civil RICO: How Ambiguity Allowed
the Racketeer Influenced and Corrupt Organizations Act to Expand Beyond Its Intended Purpose,
38 New Eng. J. on Crim. & Civ. Confinement 241, 253-55 (2012).
The district court’s decision, however, takes this extension of RICO to the
point of absurdity. The “racketeering” on which the decision is based arises from
Donziger’s assertion of claims on behalf of Ecuadorian villagers, seeking damages
resulting from an environmental disaster that Chevron does not deny causing. The
lawsuit was “extortion,” the district court held, because it caused Chevron to “fear
… an economic loss.” SPA-370. Emails containing legal opinions and
characterizing the extent of environmental damage were “wire fraud” because the
statements “falsely portray[ed] the extent of [Chevron’s] potential exposure and
the likelihood of an adverse result.” SPA-391-93. And other attempts to hold
Chevron accountable for its damage to Ecuador’s environment—including an
“expansive media campaign” and the lobbying of public officials and
shareholders—were part of the scheme because they were designed to “driv[e]
Chevron to the settlement table.” SPA-307. None of this is “extortion”; it is an
exercise of the freedom to speak and to petition government that the First
111
Amendment is designed to protect. See Sosa v. DIRECTV, Inc., 437 F.3d 923, 932
(9th Cir. 2006) (holding that litigation-related conduct was protected petitioning
under the First Amendment and thus immune from RICO liability).
Moreover, the remedy the district court granted for this alleged criminal
enterprise was not damages, as RICO’s plain language provides for, but equitable
relief against enforcement of the Ecuadorian court’s judgment—a judgment
independently examined and reaffirmed by that nation’s highest courts. The
district court’s decision brands as criminals not only Donziger and his legal team,
but the Ecuadorian judicial system responsible for upholding that judgment. And it
does so without even the benefit of a jury trial.
The district court was able to reach that result only by setting aside virtually
every statutory limit on civil causes of action under RICO. 18 U.S.C. § 1964(c). As
explained below, the court ignored that section’s injury and causation requirements,
finding them inapplicable for the paradoxical reason that the section does not
authorize the equitable relief that the court was granting. That unprecedented
interpretation would allow a single district judge vast power, untethered by RICO’s
usual statutory limits, to grant injunctions, seize assets, and dissolve or reorganize
companies “to prevent or restrain” alleged RICO violations anywhere in the world.
112
B.
The district court did not find that Chevron satisfied
RICO’s statutory prerequisites for a private right of action.
Section 1964(c) creates a private right of action for damages under RICO,
allowing “any person injured in his business or property by reason of a violation of
section 1962” to “sue therefor in any appropriate United States district court” for
“threefold the damages he sustains.” By its plain language, RICO thus allows
plaintiffs to sue only when they have been “injured” and when the cause of the
injury is “by reason” of a RICO violation. In light of the potential for vast civil
liability within RICO’s scope, both the Supreme Court and this Court interpret
these statutory limits as “more rigorous” than Article III’s analogous injury and
causation requirements. Denney v. Deutsche Bank AG, 443 F.3d 253, 266 (2d Cir.
2006). Chevron fails both requirements.
First, RICO’s requirement of “damage to business and property” requires an
“actual, quantifiable injury.” McLaughlin v. Am. Tobacco Co., 522 F.3d 215, 227 (2d.
Cir. 2008). Although it has made broad statements about the costs of the
Ecuadorian litigation and the allegedly fraudulent statements by the defendants,
Chevron has not alleged any actual damages or identified specific monetary losses.
See Oscar v. Univ. Students Coop. Ass’n, 965 F.2d 783, 785 (9th Cir. 1992) (en banc) (“A
showing of injury requires proof of concrete financial loss.”). Moreover, the risk of
future loss is not enough: “[A] cause of action does not accrue under RICO until
the amount of damages becomes clear and definite.” First Nationwide Bank v. Gelt
113
Funding Corp., 27 F.3d 763, 768 (2d Cir. 1994). Given that Chevron has yet to pay
any damages on the Ecuadorian judgment, and that it continues to fight
enforcement, the company cannot come close to satisfying the “clear and definite”
standard. See Motorola Credit Corp. v. Uzan, 322 F.3d 130, 135-36 (2d Cir. 2003)
(holding that claims for damages based on fraudulent loans were not a “cognizable
injury under RICO” before the loans had been foreclosed). RICO does not allow
Chevron to recover for “all losses that may occur, but only for those actually suffered.”
First Nationwide, 27 F.3d at 768 (emphases added).
Second, RICO’s requirement that a private party be “injured … by reason
of” a statutory violation is a “demand for some direct relation between the injury
asserted and the injurious conduct alleged.” Holmes v. Sec. Investor Prot. Corp., 503
U.S. 258, 268 (1992) (emphasis added); see also Anza v. Ideal Steel Corporation, 547 U.S.
451, 461 (2006) (describing the proper inquiry as “whether the alleged violation led
directly to the plaintiff’s injuries”). That means a plaintiff must prove that the
RICO violations were “not only … a ‘but for’ cause of [its] injury, but … the
proximate cause as well.” Holmes, 503 U.S. at 268. The district court’s 586-page
decision devotes just one sentence to that critical question. It says: “Significantly,
Chevron’s injuries are not attributable to a cause independent of defendants’
ghostwriting, bribery and other misconduct.” SPA-416. But the district court did
114
not explain how it ruled out the obvious “independent” cause: Chevron’s own
illegal pollution.
Although the district court acknowledged that RICO ordinarily requires a
plaintiff to prove “injury to business or property … caused by the violation of
Section 1962,” SPA-366, it wrongly assumed that this requirement was relevant
only “[i]n a suit for damages for such a violation.” Id. (emphasis added). Because
“Chevron at this point … seeks only equitable relief,” the court wrote, the
company was required to prove only that a violation of RICO took place—that is,
“(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.”
Id. Chevron, in other words, was required by the district court to prove only that a
violation of RICO occurred, not that it was injured by the violation.
The district court cited no authority for that conclusion, and there is none.
Indeed, the two cases on which the court relied say the opposite. In the first, Sedima,
S.P.R.L. v. Imrex Co., Inc., the Supreme Court wrote that “the plaintiff only has
standing if, and can only recover to the extent that, he has been injured in his
business or property by the conduct constituting the violation.” 473 U.S. 479, 496 (1985)
(emphasis added). In the second, Spool v. World Child Int’l Adoption Agency, this Court
wrote that, “[t]o establish a RICO claim,” a plaintiff must show not just “a
violation of the RICO statute,” but also “an injury to business or property” and
“that the injury was caused by the violation of Section 1962.’” 520 F.3d 178, 183
115
(2d Cir. 2008) (quoting DeFalco v. Bernas, 244 F.3d 286, 305 (2d Cir. 2001)). Neither
case even suggests, much less holds, that a different standard applies to claims for
equitable relief.
Nor does anything in RICO itself support any limitation to its requirement
that a plaintiff prove an injury “by reason of a violation of” the law’s substantive
provisions. 18 U.S.C. § 1964(c). To be sure, the cause of action in § 1964(c)
authorizes awards of damages, not equitable relief. But the lack of any statutory
authorization for Chevron’s requested relief is hardly a reason for granting that
relief untethered from other statutory requirements.
C.
The absence of any authorization for equitable relief in
RICO’s civil-remedies provision, far from justifying a
judgment for Chevron, is an independent reason for
rejecting Chevron’s claims.
RICO’s civil-remedies provision grants district courts “jurisdiction to prevent
and restrain violations” of RICO by issuing the full range of “appropriate orders”
available to courts of equity. Id. § 1964(a). But it limits who can seek such equitable
relief: Whereas “[t]he Attorney General may institute proceedings under this
section”—and the court may issue temporary relief in them “as it shall deem
proper”—private parties are not similarly empowered; they “may sue therefor in
any appropriate United States district court and shall recover threefold the
damages . . . sustain[ed],” plus attorney’s fees and costs. Id. § 1964(b), (c). Thus, as
116
RICO’s text and structure makes clear, the statute does not authorize equitable
relief in private civil actions.
The analysis should end there. But if this Court needs further confirmation,
there is no shortage of evidence in the statute’s legislative history that limiting
RICO’s private cause of action to damages claims was a deliberate choice by
Congress. The Supreme Court has explained that RICO’s civil-remedies provision
was “limited to injunctive actions by the United States,” and that a proposed
“amendment that would have allowed private injunctive actions” was withdrawn
because it was “greeted with some hostility.” Sedima, S.P.R.L, 473 U.S. at 487; see
Religious Tech. Ctr. v. Wollersheim, 796 F.2d 1076, 1084-85 (9th Cir. 1986) (reviewing
legislative history).
Based on the statute’s language and history, virtually all courts that have
addressed the question have concluded that RICO’s civil-damages provision means
what it says: Plaintiffs are entitled to damages, not injunctions and other equitable
relief. In the only court of appeals decision to squarely confront the issue, the Ninth
Circuit held that equitable relief is “not available to a private party in a civil RICO
action.” Wollersheim, 796 F.2d at 1084. And this Court has twice strongly suggested
that, were it to address the question, it would conclude the same. See Sedima, S.P.R.L.
v. Imrex Co., 741 F.2d 482, 490 n.20 (2d Cir. 1984), rev’d on other grounds, 473 U.S.
479 (stating that RICO “was not intended to provide private parties injunctive
117
relief”); Trane Co. v. O’Connor Sec., 718 F.2d 26, 28-29 (2d Cir. 1983) (expressing
“serious doubt” about the “propriety of private party injunctive relief” under
RICO). So too have other circuits.27
Without addressing this Court’s reasons for doubting the availability of
equitable relief in Sedima and Trane Co., the district court sided against the majority
and with the Seventh Circuit’s now-vacated decision in National Org. for Women, Inc.
v. Scheidler, 267 F.3d 687 (7th Cir. 2001), rev’d on other grounds, 537 U.S. 393 (2003).
But even assuming that Scheidler was decided correctly, it would not support the
district court’s decision here.28 Although the Seventh Circuit did uphold injunctive
relief, the plaintiffs in Scheidler also sought and were awarded damages. Id. at 693.
Scheidler is thus expressly predicated on the assumption that the plaintiffs had “been
See, e.g., Wheeling-Pittsburgh Steel Corp. v. Mitsu Corp., 221 F.3d 924, 927 n.2
(6th Cir. 2000) (“[O]nly treble damages, attorneys’ fees and costs are afforded to
private parties under RICO.”); Johnson v. Collins Ent. Co., 199 F.3d 710, 726 (4th Cir.
1999) (expressing “substantial doubt whether RICO grants private parties . . . a
cause of action for equitable relief,” which is “especially acute in light of the fact
that Congress has declined to authorize injunctive remedies for private parties”); In
re Fredeman Litig., 843 F.2d 821, 830 (5th Cir. 1988) (“Congress indeed had several
opportunities to give express authorization to private injunctive actions but chose
not to do so, apparently because it hesitated in the face of the ramifications of that
remedy.”).
28 The Solicitor General filed a brief in the Supreme Court in Scheidler
expressing the United States’ view that RICO does not authorize private parties
“to seek equitable remedies.” Br. of United States, 2005 WL 2138277, at *19-*27.
27
118
injured in their business or property by reason of a RICO violation” and satisfied
RICO’s injury and causation requirements. Id. at 696.
Neither Scheidler nor, to our knowledge, any other court has held, as the
district court did here, that injunctive relief is available in the absence of any
damages claim and regardless of § 1964(c)’s requirements. In this way, too, the
district court’s decision was truly unprecedented.
CONCLUSION
The district court’s judgment should be reversed and its findings should be
vacated.
Respectfully submitted,
/s/ Deepak Gupta
_____________________________
Deepak Gupta
Gregory A. Beck
Jonathan E. Taylor
GUPTA BECK PLLC
1735 20th Street, NW
Washington, DC 20009
(202) 888-1741
Justin Marceau
John Campbell
University of Denver
Sturm College of Law
2255 E. Evans Avenue
Denver, CO 80208
(303) 871-6000
119
July 16, 2014
Counsel for Defendants-Appellants Steven
Donziger, The Law Offices of Steven Donziger,
and Donziger & Associates PLLC29
Counsel gratefully acknowledge the contributions of the following law
students: Daniel Townsend of Yale Law School; Shelby Leighton of Georgetown
University Law Center; and Aaron Belzer, Matt Fogg, Jonathan Goldstein,
Meagan Healy, Alex Jennings, Katie McAuley, Juliana Okulski, Sam Peaslee, and
Brycen Williams of the University of Denver, Sturm College of Law.
29
120
CERTIFICATE OF COMPLIANCE WITH RULE 32(a)(7)
I hereby certify that my word processing program, Microsoft Word, counted
28,945 words in the foregoing brief, exclusive of the portions excluded by Rule
32(a)(7)(B)(iii).
/s/ Deepak Gupta
_____________________________
Deepak Gupta
July 16, 2014
CERTIFICATE OF SERVICE
I hereby certify that on July 16, 2014, I electronically filed the foregoing
Corrected Brief for Defendants-Appellants Steven Donziger, The Law Offices of
Steven Donziger, and Donziger & Associates PLLC with the Clerk of the Court of
the U.S. Court of Appeals for the Second Circuit by using the Appellate CM/ECF
system. All participants are registered CM/ECF users, and will be served by the
Appellate CM/ECF system.
/s/ Deepak Gupta
________________________________
Deepak Gupta